Installations and airlines regulated under the EU ETS collectively recorded a 0.5% drop in emissions in 2015, preliminary data released by the European Commission on Friday showed when comparing on a like-for-like basis.

The data showed emissions of 1.670 billion, down from 1.678 billion in 2014, for the 10,488 installations and aircraft operators from the 31 participating countries that have reporting emissions for both years.

When excluding aviation, the annual decline was 0.4%.

“The trend of declining emissions that has been in place since 2011 has now slow down nearly to a halt,” said Yan Qin, a senior analyst at Thomson Reuters Point Carbon.

The figures suggest that last year’s emissions were lower than most analysts expected, as a Carbon Pulse poll last month showed they were predicting, on average, a 0.2% year-on-year rise.

Environmental campaigners Sandbag said today’s extrapolated data showed an 0.6% decline to 1.802 billion tonnes, while Thomson Reuters Point Carbon said emissions from both the power and industrial sectors were down 0.4% year-on-year, with the total tonnage under the ETS including aviation down 0.3% to 1.863 billion.

BREAKDOWN

“We see [lower] emissions in the power sector due to improved profitability for gas-fired power plants amid plunging oil and gas prices, as well as a continued shift towards renewable energy sources,” said Point Carbon’s Marcus Ferdinand, adding that the decline came despite a 0.5% increase in electricity demand across the bloc last year.

Despite advances in wind and solar generation, fossil fuel-based output made up a greater share of generation in 2015, according to Point Carbon, partially because of drought-stricken hydro plants in Spain and Portugal.

Meanwhile, Ferdinand said emission paths diverged within industrial sectors. Oil and gas discharges grew 2.4% as refinery margins improved on lower oil prices, while steel-dominated metal sector emissions fell 2.3% as mills cut production as global oversupply hit steel prices.

“What is interesting is the fall in industrial sectors like iron & steel and cement, where it’s much more difficult to assess how much is linked to economic reasons and how much to energy efficiency,” said Matteo Mazzoni of Italy-based Nomisma Energia.

The aviation sector grew the most in percentage terms with its output rising by 3.6%.

“The sector became less CO2 efficient last year as emissions grew faster than flight traffic, which grew by only 1.5% in 2015,” said Point Carbon’s Ingvild Sorhus.

In terms of the EU’s top emitting countries, Germany’s output dropped by 0.6%, the UK’s by 10.3%, France’s by 0.8%, and Poland’s by 0.1%.  However, Italy increased its emissions by 2.7%, Spain by 10.1%, and the Netherlands by 5.9%, the data showed.

Lithuania appeared to be the only country to have not yet reported the bulk of its 2015 emissions data, while seven of Poland’s top 11 emitting installations did not submit figures, including PGE’s Belchatow plant, the EU’s top emitter in 2014.

DECOUPLING

The overall decrease in emissions came despite a 1.9% increase in GDP across the 28-nation bloc in 2015, again showing that European countries were able to grow their economies while cutting greenhouse gas output in their regulated sectors.

The numbers also suggest that ETS emissions fell by less than the annual decrease of the market’s overall cap, which reduces annually by 1.74% below 2012 levels over 2013-2020, the scheme’s third trading phase.

The preliminary data, which according to Point Carbon’s calculations covers around 90% of the more than 11,000 installations and airlines expected to report their 2015 emissions, will be updated in the coming weeks as more companies submit their figures.

EUA PRICE IMPACT

EU Allowance prices fell in the immediate aftermath of the data release, but had recovered somewhat from their intraday low by 1100 GMT.

Benchmark Dec-16 EUA prices were down 17 cents at €5.05 by midday in London, having traded at €5.13 ahead of the data before shedding as much as 5.9% to €4.91 after the release.

“The reaction has been quite timid so far, and coherent with the profit taking strategy we already saw in previous years,” Mazzoni said.

EU carbon prices had climbed by as much as 9% or 43 cents over the previous two sessions in what traders attributed to short-covering ahead of the data release, which some said could have brought surprises that might have jolted the market.

Below is a table of the preliminary emissions figures, broken down by EU member state, from the stationary installations and airlines regulated under the ETS.  They are expressed in millions of tonnes of CO2e.

And below is a table of the preliminary emissions data broken down by sector grouping.

*Includes industrial combustion facilities.

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