The European Commission has adopted its annual report on the functioning of the European carbon market. The report, covering the year 2017, shows that in that period the EU power sector reduced its greenhouse gas emissions for the sixth year in a row. Emissions of industrial installations, however, which receive the vast majority of their emission allowances for free, slightly increased, leading to an overall increase in ETS emissions by 0.18% in comparison to 2016. While this breaks the decreasing trend since 2013, it can be explained by the highest growth in real GDP since 2011. Verified emissions from aviation continued to grow, marking an increase of 4.5% compared to 2016.

Efforts to reduce the surplus of allowances on the carbon market are starting to be rewarded. The surplus has declined for the third year in a row, by an overall amount of almost half a billion allowances. As of next year, the Market Stability Reserve will further reduce the surplus by 24% of its overall amount each year from 2019 until 2023.

The total revenues raised from selling ETS allowances from 2012 until the end of 2017 exceeded EUR 21 billion – on average EUR 3.5 billion per year. In 2017, EU Member States spent or planned to spend 80% of auction revenues on advancing climate and energy objectives – well above the 50% rule set under the EU ETS Directive.

Source: European Commission website

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