Emissions of greenhouse gases from EU businesses participating in the EU Emissions Trading System (EU ETS) fell 11.6 % in 2009 compared with a 2008, according to the information provided by Member State registries.

Climate Action Commissioner Connie Hedegaard said: "Due to the crisis the significant drop in emissions does not come as a surprise. The EU has a functioning trading system driving emission reductions even during a recession. We should not hide that the recession has significantly weakened the price signal. The carbon market can and should be a stronger driver for low-carbon investments. And we must also realise that because of the crisis it suddenly became easier to reduce emissions and that is good. Unfortunately that also means that European business did not invest nearly as much as planned in innovation, which could harm our future ability to compete on promising markets."

2009 emissions data

Verified emissions of greenhouse gases from all installations in the EU ETS in 2009 totalled 1.873 billion tonnes of CO2-equivalent. 2009 were about 11.6 % lower than the 2008 level.

The drop in emissions is in line with widely held expectations and analyst forecasts provided months ahead of the data release. It is attributed to several factors. Firstly, the reduced economic activity as a result of the recession and secondly, the low level of gas prices throughout 2009 which has made it much more attractive to produce power from gas rather than more emitting coal. Furthermore, the carbon price in phase 2 (2008-2012) of the EU ETS has surely also resulted in companies changing behaviour and reducing emissions.

High level of compliance

Of all the installations participating in the scheme last year, 2 % did not surrender the required quantity of allowances by the deadline of 1 May 2010. These installations are typically small and together they account for less than 2% of emission captured in the EU ETS.

3% of the installations failed to submit verified emissions for the year 2009 before 1 May 2010.

Continued but limited use of international credits

Since 2008 it is possible for installations to surrender international emission reduction credits generated through the Kyoto Protocol’s flexible mechanisms1 in order to offset part of their emissions. In 2009, CERs accounted for 4,1% of all surrenders. 52% of these originated in China, 21% in India, 14% in South Korea and 9% in Brazil, with a further 19 countries of origin accounting for the remaining 4%.

ERUs accounted for only 0.17% of all surrenders. The combined CER and ERU surrenders used up since 2008 only roughly 12% of the approximately 1.4 billion credits that are allowed over the 2008-2012 trading period.

Background

The second trading period of the EU ETS began on 1 January 2008 and runs for five years until 31 December 2012. This period coincides with the period during which industrialised countries must meet their Kyoto Protocol emission targets. The EU ETS will be substantially reformed for the third trading period, which will start on 1 January 2013 and run until 2020. The legislation revising the Emissions Trading Directive was adopted as part of the EU climate and energy package on 23 April 2009 (IP/09/628).

Under the EU ETS, installations are required to submit their verified emissions data for each year to Member State registries. For 2009 this data became publicly available on the Community Independent Transaction Log (CITL) on 1 April 2010. From 15 May onwards the CITL also displays compliance data, with information on whether installations have complied with their obligations to surrender an amount of allowances equal to last year's verified emissions.