EU carbon market emissions fell by 9.1% in 2019: EU Commission

FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels, Belgium August 21, 2020. REUTERS/Yves Herman

LONDON (Reuters) - Greenhouse gas emissions regulated under Europe’s carbon market fell by 9.1% last year from a year earlier, the European Commission said in a report to the European Parliament and Council on Wednesday.

The fall was slightly bigger than the 8.7% previously announced by the Commission in May.

Around 45% of the European Union’s output of greenhouse gases is regulated by the Emissions Trading System (ETS), the bloc’s flagship policy to tackle global warming by charging for the right to emit carbon dioxide.

The EU uses firms’ annual emissions data to work out how many surplus permits are in the ETS. A market stability reserve (MSR) then removes a share of these permits, to avoid a build-up of oversupply that could depress the carbon price.

In 2019, the surplus of permits decreased to around 1.39 billion permits from 1.65 billion in 2018.

Based on the this and revised EU ETS legislation, the supply available for auctioning in 2020 will be reduced by around 375 million allowances (nearly 35%), the Commission said.

Under the ETS, businesses can buy permits through auctions that are held on behalf of EU member states.

In 2019, member states generated around 14 billion euros ($17 billion) from auctioning permits, similar to the previous year, the Commission added.

Reporting by Nina Chestney; Editing by Steve Orlofsky