Greenhouse gas emissions under the EU Emissions Trading System

Europe’s Emissions Trading System (ETS) has seen greenhouse gas emissions decrease significantly since its launch in 2005. Carbon pricing, changes in fuel prices and climate policies, including those promoting renewable energy, have driven emission reductions from stationary installations and contributed considerably to EU's climate objectives. Emissions fell substantially in 2023, marking the largest annual reduction since the ETS launch. The new target for 2030 is defined as a 62% reduction compared to 2005 for the whole ETS scope. Recent projections suggest that with strong and decicive action, this target may be within reach.

The EU Emissions Trading System (ETS) is a ‘cap and trade’ system operating in the European Economic Area . It sets a yearly cap on greenhouse gas (GHG) emissions from stationary installations, covering power and carbon-intense industries, flights within the European Economic Area and, from 2024, international navigation. ETS emissions from stationary installations in 2023 accounted for 34% of total GHG emissions from the European Economic Area.

Emissions from stationary installations have declined by 48% since the ETS was introduced in 2005. The main drivers of these reductions have been a rising carbon price, changing fuel prices encouraging a transition away from coal, and renewable energy policies aimed at decarbonising the power sector. Lower energy demand, significant reductions in the industrial sector, and global events such as the 2008 economic crisis and the Covid-19 pandemic have also played a role.

Compared to 2022, data for 2023 show a decrease of 217 megatonnes of carbon dioxide equivalents (MtCO₂e) in emissions from stationary installations. This decrease of 17% marks the largest annual reduction since the ETS was launched. It brings emissions covered by the ETS to a level less than the observed Covid-19 related minimum in 2020. The main driver for this substantial reduction was the continued deployment of renewable electricity production and a combination of reduced output and efficiency gains in industrial sectors.

The ETS Directive was amended in May 2023 to include a more ambitious target for emissions covered by the ETS: 62% reduction compared with 2005 for the whole ETS scope, including aviation and shipping, with a stricter yearly emissions cap. This revision was part of the Fit for 55 package aimed at reducing net GHG emissions by 55% by 2030, compared with 1990. The EU also aims to achieve climate neutrality by 2050.

Projections provided by participating countries, based on a 'with existing measures' (WEM) scenario, indicate that in 2030, stationary ETS emissions are expected to reach emissions levels 54% below 2005 levels. The more ambitious “with additional measures” (WAM) scenario projects a 59% reduction in 2030 compared to 2005. The power sector and, to a lesser extent, manufacturing industries, are expected to account for most of the projected reduction in ETS emissions. While the WAM scenario is still higher than the cap in 2030, it shows that with strong, decisive and continued efforts, the EU is on track to meet its ETS target.

Over the past decade, most of the reduction in ETS emissions can be attributed to decreasing emissions from ‘combustion of fuels’, pimarily in the power sector. This reflects the ongoing decarbonisation of the European energy system, characterised by a switch from coal to gas and renewables.

In 2023, emissions from ‘combustion of fuels’ decreased considerably, driven by a shift towards renewable energy sources and a decline in electricity demand. Coal and lignite power plants played a significant role as well, together with emission reductions from cement, iron, refineries and 'other sectors'.

Flights within the European Economic Area are also covered by the ETS. Emissions from aviation have grown rapidly since 2013, driven by increased air travel and challenges in decarbonising this sector. Emissions dropped temporarily due to strict travel restrictions imposed during the COVID-19 pandemic but have since accelerated again, reflecting a rebound in air traffic. From 2024, maritime transport will be included in the EU ETS and from 2027, a new ETS 2 will be introduced to incentivise reductions in buildings and road transport emissions.

Supporting information

Definition

This indicator shows greenhouse gas emissions covered under the EU Emissions Trading System (EU ETS) since its inception in 2005. It also shows projections of this emissions to 2030 and the maximum number of emissions allowances (cap) foreseen.

Figure 2 shows the evolution of emissions, in percentage change since 2013, for selected industrial sectors and for aviation. The year 2013 was chosen since it is the first year offering a comparable scope in sectoral categories.

Detailed data and information on historical ETS emissions can be found in the ETS data viewer and associated documentation. Information on GHG Projections can be found in the dedicated data viewer, datahub and Climate and Energy platform.

Geographical scope:

The EU ETS applies in the European Economic Area, comprising all the EU Member States, Iceland, Liechtenstein, and Norway. The United Kingdom does not participate in the EU ETS since 2021 and has been excluded from this indicator. The exception are power plants in Northern Ireland, which are included in the system. For intra-European flights, the ETS includes flights departing and landing within the European Economic Area, as well as flights to Switzerland and the UK. Flights to and from outermost EU regions will be added from 2024. For extra-European flights the obligations under the EU ETS Directive can be fulfilled through CORSIA .

Sectors:

The EU ETS applies to stationary facilities covering the electricity and heat sector and energy-intensive industries, over certain thresholds. Flights departing and landing within participating countries are also covered by the ETS, as well as flights from EEA countries to UK and Switzerland. From 2026 on, international shipping will be included, too. For more information on the scope of the ETS please visit the dedicated Commission’s website.

Projections:

The projections from EU Member States, Iceland and Norway were provided by the countries to the EEA as part of their reporting under Article 18 of the Governance Regulation. Emissions from Liechtenstein are projected to be zero, as their ETS emissions in 2021 and 2022. Emissions of Northern Ireland have been estimated, applying the average reduction of EU-27 countries.

Targets:

The indicator considers the current scope of the EU ETS, while the new target applies to an extended scope including also maritime transport, among other changes. More information is available in DG CLIMA’s website.

Methodology

Data on emissions from the EU ETS originates from EU Transaction Log and is provided by the EU Commission to the European Environment Agency. This data is then processed by the European Topic Centre on Climate Change Mitigation (ETC-CM). More information available on the ETC-CM documentation (under the tab Additional Information).

The scope of the ETS has changed since its inception, with new sectors, gases and countries being added. To make emissions comparable across years, an estimate was made to reflect the current scope across the whole timeline (i.e. how emissions would have been in the past if the current scope was applied). More information on this scope estimate can be found here.

Projections of greenhouse gases are provided by Member States to the EEA under the Governance Regulation. This occurs every two years with some Member States providing updates yearly.

Policy/environmental relevance

The EU ETS is a cornerstone of the EU's policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively. It is the world's first major carbon market and remains the biggest one.

The EU ETS is a ‘cap and trade system’, whereby a cap (i.e. a determined quantity of emission

allowances) is set on the emissions from the installations covered by the system. The cap decreases

gradually in order to achieve emission reductions over time. Installations can trade emission allowances with one another, which ensures that emission reductions take place where it costs least.

This indicator helps monitoring the reduction in emissions under this key mechanism and tracking the progress towards the agreed target. It also illustrates differences between different industrial sectors and aviation, highlighting differences in progress among them.

Accuracy and uncertaintiesData sources and providers

Metadata

DPSIRTopicsTagsTemporal coverageGeographic coverage

TypologyUN SDGsUnit of measureFrequency of dissemination

Greenhouse gas emissions under the EU Emissions Trading System

Figure 1. Historical and projected emissions from stationary installations covered by the EU Emissions Trading System in the European Economic Area

Figure 2. Changes in emissions covered by the EU Emissions Trading System by sector, 2013-2023, relative to 2013

Supporting information

Metadata

References and footnotes