EU Emissions Trading System: Significant Reductions in Greenhouse Gas Emissions
Overview
The EU Emissions Trading System (EU ETS) has successfully reduced emissions in covered sectors by 50% since 2005. This achievement highlights the system's effectiveness in driving decarbonization across Europe.
The EU Emissions Trading System (EU ETS) has been a cornerstone of the European Union's climate policy since its inception in 2005. Designed as a cap-and-trade system, it aims to reduce greenhouse gas emissions by setting a cap on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. Over the years, the EU ETS has proven to be a powerful tool in the fight against climate change.
Power Sector Achievements
The power sector has been the most significant contributor to the reduction in emissions under the EU ETS. In 2024 alone, emissions from electricity production decreased by 12% compared to the previous year. This impressive reduction was driven by a substantial increase in renewable energy production, with solar power growing by 19% and hydropower also playing a crucial role. Additionally, nuclear energy production increased by 5%, while the use of gas and coal decreased by 8% and 15%, respectively.
Industrial Sector Performance
While the power sector has made significant strides, the industrial sector's progress has been more varied. Emissions from energy-intensive industries remained relatively stable overall. However, there were notable differences between sectors. For instance, emissions in the fertilizer sector increased by 7% due to a 6% rise in production, while the cement sector saw a 5% decrease in emissions, correlating with a reduction in production volumes.
Aviation Sector Challenges
Aviation emissions under the EU ETS increased by approximately 15% in 2024 compared to the previous year. This rise was partly due to the re-inclusion of non-domestic flights to and from airports in outermost regions. The expansion of the system's geographical coverage has brought more flights under its purview, highlighting the ongoing challenges in reducing emissions in the aviation sector.
Maritime Sector Inclusion
For the first time, maritime transport emissions were reported under the EU ETS in 2025. This inclusion marks a significant expansion of the system, building on the monitoring, reporting, and verification of maritime emissions that have been in place since 2018. As of April 2025, shipping companies have reported around 72 million tonnes of CO2 emissions under the EU ETS.
The EU Emissions Trading System has demonstrated its effectiveness in reducing emissions across various sectors, with a 50% reduction since 2005. The power sector's transition to renewable energy has been particularly noteworthy, while the inclusion of maritime transport marks a new chapter in the system's evolution. As the EU ETS continues to adapt and expand, it remains a critical tool in the fight against climate change.
