EU Carbon Market Emissions Fell 5% in 2024. Power Did Almost All the Work

Emissions covered by the EU emissions trading system fell by 5% in 2024 compared with 2023, according to data reported by member states by the 31 March 2025 deadline and published by the European Commission on 4 April. The figure covers stationary installations and aircraft operators. The Commission said emissions in the sectors covered by the system are now around 50% below 2005 levels and on track for the 2030 target of a 62% reduction.

The Commission's early release focused on the power sector, and detailed figures for industrial sectors will follow in its annual carbon market report. Aviation emissions within the scope of the system rose, reflecting continued recovery in air travel. Two of the factors behind the power sector decline were the recovery of French nuclear output and higher hydropower generation across much of Europe. The 19% rise in solar generation reflects continued rapid installation of solar panels across the EU, both on rooftops and in utility-scale projects.

Solar output peaks in the middle of the day in summer, which displaces gas generation during those hours and pushes wholesale prices down, sometimes below zero. EU allowance prices in 2024 were lower than the peaks reached in 2023, reflecting weaker demand from both power and industry. From 2026, free allocation to industrial sectors covered by the EU carbon border adjustment mechanism will start to fall, which will increase the number of allowances those sectors need to buy.

The emissions trading system also generates significant revenue for member states and EU funds. A second emissions trading system covering fuel for buildings and road transport, known as ETS2, is scheduled to start in 2027. The 2024 data show that the EU's carbon market is increasingly a story about the power sector's fuel mix. For gas markets, lower power sector demand for gas in 2024 was one factor helping Europe rebuild storage after the 2022 crisis.

Several EU member states no longer burn coal for power, and others have set closure dates within the decade. The Commission's full carbon market report later in 2025 will provide final figures by sector and country.