Emissions covered by the EU Emissions Trading System fell by 1.3% in 2025 compared with 2024, the European Commission said on 10 April 2026. The figures are based on verified emissions data reported by member states by the 31 March deadline and cover stationary installations, aviation and maritime transport. The Commission noted that reporting for aviation and maritime operators was still being completed, so the final figures could change slightly.
The Commission said the decline continues the downward trend of emissions under the system and remains consistent with the target of reducing ETS emissions by 62% by 2030 compared with 2005 levels.
A slower decline
The 2025 decrease is much smaller than in the previous two years. In April 2025, the Commission reported that emissions in sectors covered by the ETS had fallen by about 50% since 2005, after large reductions in 2023 and 2024 driven mainly by the power sector. In those years, record additions of wind and solar capacity, the recovery of French nuclear output and a rebound in hydropower displaced coal and gas generation.
The Commission did not attribute the smaller decline to a single factor. Market commentary through 2025 pointed to several. Hydropower output in parts of Europe was lower than in 2024 because of drier conditions. Wind output was weak in the first months of the year. Gas generation increased in some markets to fill the gap. Industrial production, which had fallen sharply in 2022 and 2023 because of high energy prices, stabilised in some sectors.
Sector detail
The power sector has accounted for the bulk of ETS emission reductions over the past two decades. Coal generation has fallen sharply across the EU, and several countries, including Ireland, Italy and Spain, have closed or are closing their remaining coal plants. Germany and Poland remain the largest coal users. Gas has replaced some coal, but wind and solar have provided most of the growth in generation.
Industrial emissions from steel, cement, chemicals and refining have declined more slowly. Many of these processes involve emissions that cannot be eliminated simply by switching to clean electricity, such as the chemical reactions in cement production. Industry has received free allowances to protect against carbon leakage, but free allocation is being phased out from 2026 alongside the introduction of the carbon border adjustment mechanism.
Maritime transport was brought into the ETS in 2024, with shipping companies required to surrender allowances for a growing share of emissions. Industry reports based on the Commission data indicated that maritime emissions fell about 3% in 2025. Aviation within Europe has been covered since 2012.
Carbon price context
The EU carbon price is set by the market for European Union Allowances. The price is influenced by the supply of allowances, which is reduced each year under the cap, the Market Stability Reserve, which removes surplus allowances from circulation, and demand from emitters. Lower emissions reduce demand, which can weigh on prices, while the declining cap tightens supply over time.
Market participants follow the annual verified emissions data closely because it shows whether the market is moving towards a surplus or a deficit. The size of the surplus determines how many allowances the Market Stability Reserve absorbs the following year.
What it means for energy markets
For power markets, the ETS adds a cost to fossil fuel generation that varies with the carbon price and the carbon intensity of each plant. Coal plants pay roughly twice as much per megawatt-hour as efficient gas plants. That cost affects which plants run and therefore wholesale power prices. A carbon price that is high enough makes gas generation cheaper than coal even when gas prices are relatively high.
For gas markets, the ETS influences demand from the power sector. If the carbon price falls, coal becomes more competitive and gas demand may weaken. If it rises, the reverse happens. With coal capacity shrinking across Europe, the scope for switching between coal and gas is smaller than it was a decade ago.
For industrial energy users, the ETS adds a cost that is partly offset by free allocation. As free allocation is phased out between 2026 and 2034, industrial users will face a rising effective carbon cost unless they invest in lower-emission processes such as electric arc furnaces, hydrogen or carbon capture.
Wider policy context
The 2025 data come as the EU has adopted a 2040 climate target of a 90% net emissions cut, which was published in the Official Journal in March 2026. The ETS cap trajectory implies that issuance of new allowances for stationary installations approaches zero towards the end of the 2030s. A separate system, ETS2, covering fuels for buildings and road transport, has been delayed to 2028.
The CBAM's definitive period started on 1 January 2026, requiring importers of covered goods to account for the embedded emissions. Importers will buy CBAM certificates priced in line with EU allowances, with sales starting in February 2027.
Member state differences
The national picture varies. Countries that have largely phased out coal have less room for further quick reductions in power emissions, so their progress now depends on industry, transport and heating. Countries still burning significant amounts of coal, such as Poland, Germany, Czechia and Bulgaria, have more potential for rapid cuts in the power sector as renewables and gas replace older plants. The pace of coal closures in these countries will shape ETS emissions in the second half of the decade.
Data centres and the ETS
Data centres themselves are not covered by the ETS, but their electricity consumption affects power sector emissions. Where data centre demand is met by fossil generation, it increases ETS-covered emissions and demand for allowances. Where it is met by new wind and solar, the effect on ETS emissions is limited. Several large technology companies have signed long-term contracts for renewable power in Europe to supply their data centres.
What to watch
The Commission will publish final figures once aviation and maritime reporting is complete. It will also publish the total number of allowances in circulation by 1 June, which determines the volume absorbed by the Market Stability Reserve. Market participants will watch how power demand growth, including from data centres and electrification, affects emissions in 2026.