EU carbon market emissions dropped in 2020

EU

Greenhouse gas emissions from stationary installations regulated under the EU carbon market decreased by 12.6 per cent last year to 1339 Megatons, according to analysis from Refinitiv Carbon Research of verified emission data published today by the European Commission.

In 2020, EU carbon market emissions continued a downward trend, dropping by 192 Mt compared to 2019 – the largest decline since the launch of the scheme.

Ingvild Sørhus, lead carbon analyst at Refinitiv, said: “The substantial drop in emissions is the fallout from pandemic with economic activity shrinking last year and renewables displacing fossil-fired power. All of the sectors saw emissions plunging last year as coronavirus curbed production. The largest decline occurred in the metals sector, predominantly because of lower demand for flat-products from the European automotive industry. The pandemic has also altered consumer’s behaviour to more online shopping which meant packaging, supporting the pulp and paper industry, saw a slight decline in emissions last year.”

With EU27 GDP shrinking by 6.4 per cent in 2020, the power sector’s emissions declined on the back of reduced energy demand, renewables deployment and robust fuel switching driven by high EUA prices and relatively low gas prices in 2020.

In the power and heat sector, 2020 emissions came in at 633 Mt, down 130 Mt or 17 percent year on year.

Yan Qin, another lead carbon analyst at Refinitiv, said: “Fossil-fired generation was hit hard due to lower power demand and rising output from renewables, which contributed 40 per cent of EU power generation in 2020. Fuel switching economics were unusually favourable for gas, displacing coal-fired generation amid strong carbon prices.’’

Emissions from industrial manufacturers decreased by 63 Mt or 8 per cent to 706 Mt.

The aviation sector is the worst hit by the pandemic, with emissions from intra-EU flights plunging by 60 percent to 25 Mt in 2020. Including the Aviation sector, EU carbon market emissions have tumbled by -14.4 per cent in 2020.

Despite the large drop in emissions, European carbon prices stayed consistently elevated in 2020, averaging €25/t, and reaching record highs near €44/t this year.

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