carbon emissions

EU carbon market emissions saw a record-high drop in 2020

Photo credit: johndal via Flickr.

By Anders Lorenzen

Research from Refinitiv, a market data analyst firm, has found that greenhouse gas (GHG) emissions from stationary installations regulated under the EU’s carbon market (EU ETS) decreased by 12.6% in 2020 to 1339 Megatons (Mt). The drop of 192 Mt was the largest decline experienced since the scheme began in 2005. In the power and heat sector, 2020 emissions came in at 633 Mt, down 130 Mt or 17 percent year on year.

This verified emissions data was published earlier this month by the European Commission (EC).  

A variety of factors

The decline is likely to be due to a mixture of increased renewable energy capacity, robust fuel switching favouring gas over coal due to the carbon price, as well as demand down due to the GDP of the 27 EU members shrinking by 6.4 percent due to COVID-19 lockdowns.

Ingvild Sørhus a 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.”

Yan Qin, a senior modelling analyst at Refinitiv, explained how lower power demand contributed to the decline: “fossil-fired generation was hit hard due to lower power demand and rising output from renewables, which contributed 40% of EU power generation in 2020.’

Aviation the big loser

Sørhus said that all of the sectors saw emissions plunging last year as COVID-19 curbed production. The largest decline occurred in the metals sector, predominantly as emissions from industrial manufacturers decreased by 63 Mt to 706 Mt equivalent to 8 percent. In addition, the pandemic also altered consumer behaviour to increased online shopping, meaning packaging and supporting the pulp and paper industry also saw a slight decline.

Unsurprisingly the biggest loser of the pandemic was the aviation sector with emissions from intra-EU flights plunging by 60 percent or 25Mt last year.

However, despite the large drop in emissions, EU carbon prices stayed consistently elevated in 2020 – averaging a price of €25/t but reached record highs this year near the region of €44/t. Sørhus believes that the impact of the pandemic and a more ambitious EU 2030 climate target are underlying supportive factors of a higher carbon price this year.

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