The European Commission confirmed that EU carbon market emissions fell by 5% in 2024, as reflected in the decrease in carbon dioxide emissions covered under the EU’s Emissions Trading System (ETS). The electricity industry witnessed a 12% decrease in emissions from 2023 and was primarily responsible for the decline. While the use of coal and gas decreased by 15% and 8%, respectively, this sectoral reduction was bolstered by a 5% increase in nuclear power and an 8% increase in electricity output from renewable sources.

About 45% of the EU’s greenhouse gas emissions are covered by the ETS, which demands that factories, electricity providers, and airlines pay for the emissions they emit by giving up carbon permits. According to the Commission, ETS emissions are already around 50% lower than in 2005, and the system is on course to reach the 62% reduction objective set for 2030.

Mixed Performance Across Industry and Aviation

While industry emissions were mostly steady, the electricity sector led the drop. Emissions from the fertilizer industry increased by 7%, offsetting a 5% decrease in the cement sector. In the meantime, there was a 15% increase in aircraft emissions. The Commission clarified that this rise resulted from the expansion of the system’s geographic reach by adding additional non-domestic flights to the ETS.

The ETS was extended to include certain marine emissions as of last year, contributing to the overall trend where EU carbon market emissions fell by 5% in 2024. A total of 72 million tons of CO₂ were recorded from this recently expanded maritime sector in 2024.

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Market Reactions and Price Trends

Trends in emissions were accompanied by changes in carbon pricing in the ETS market. Benchmark carbon prices on the EU ETS fell almost 4.5% on Friday afternoon, to €63 per metric tonne. A possible worldwide recession was raised by this loss, which coincided with a wider market decline when China announced retaliatory tariffs on U.S. exports.

Since their high in January 2024, prices have dropped by almost 25%. Beyond either emission levels or shifts in environmental regulations, the price volatility illustrates how sensitive carbon markets are to worldwide economic and geopolitical events.

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