(Updated on Apr. 16 to reflect a correction made by UK Environment Agency regarding the Aberthaw Power Station, which was incorrectly listed as being under Main Activity Type 21 instead of 1 in the EU’s preliminary data)

EU ETS like-for-like emissions fell 4.6% in 2014 compared to a year earlier, according to preliminary data from the European Commission on Wednesday.

Excluding aviation, the data showed a 4.8% drop, a lesser fall than the 5.5% average reduction from seven analysts’ estimates compiled by Carbon Pulse last week.

The decrease came despite a 1.4% increase in GDP across the 28-nation bloc in 2014, while unemployment fell below 10% for the first time since 2011, showing again that European countries were able to grow their economies while cutting greenhouse gas output.

Benchmark Dec-15 EUA prices climbed to €7.15 shortly after the data was published on the European Commission website around 1005 GMT, but by 1025 GMT they had slipped back to €7.09, or 12 cents above Tuesday’s settlement price on ICE.

The figures suggest ETS emissions fell further than the annual decrease of the market’s overall cap, which reduces annually by 1.74% below 2012 levels between 2013 and 2020.

The preliminary data, which according to Carbon Pulse’s calculations covers over 83% of the more than 12,000 installations expected to report their 2014 emissions, will be updated in the coming weeks as more companies submit their figures.

The data also showed that around 300 installations covered by the scheme had closed since the end of 2012.

HIGHLIGHTS

The largest drops in percentage terms amongst the bigger emitters were recorded by Slovenia (-17%), Denmark (-14.4%), France (-12.4%) and Britain (-11.4%), the data showed.

Nine of the 31 countries grew their emissions, with Spain (+2.8 mt) and the Netherlands (+2.6 mt) leading the pack in absolute terms.

Meanwhile, emissions across the power & heat installations – the largest emitting sector under the EU ETS – fell by 7%, largely due to a seasonably warm winter last year, cutting demand for heat and electricity.

Emissions from the oil & gas and pulp & paper sectors also fell by 2% and 4.6% respectively, while CO2 output from the metals industry rose 1.1% and from cement, lime, glass and ceramics by 3%.

Airlines covered by the EU ETS, which had to report two years’ worth of data this year, emitted 51.3 million tonnes in 2013, rising by 2.9% to 52.7 million tonnes in 2014, according to the incomplete data.

GLUT PEAK?

“Analysts estimate EU ETS emissions dropped by some 5% last year. But allowances surplus still growing. We need a quick and robust MSR deal!” said Europe’s climate commissioner Miguel Arias Canete on Twitter, referring to proposed reforms to the market.

The ETS regulates around half of Europe’s greenhouse gas emissions and by the end of March more than 13,000 power plants, factories and airlines in 31 countries must surrender enough allowances and UN offsets to cover their output for the previous year.

Analysts at Thomson Reuters Point Carbon noted that last year was the first time since 2008 that annual emissions in the EU ETS were higher than the annual supply introduced to the market, a phenomenon resulting from the EU’s backloading measure, which cut auction volumes by 400 million units last year and led to a net shortage of around 200 million tonnes.

“Backloading will continue for the next two years, and with a decreasing cap and the implementation of the market stability reserve, we expect the accumulated oversupply in the EU ETS to decrease as well. In fact, it is likely that 2014 could be the year when the accumulated oversupply in the European carbon market peaked,” said Yan Qin, an analyst with the firm.

The European Commission last year estimated the glut of permits weighing on the market at more than 2.1 billion units.

Below are tables of verified emissions (VE) by country and by sector (in millions of tonnes of CO2e), including percentage and absolute change compared to 2013.

By Mike Szabo and Ben Garside – mike@carbon-pulse.com