More action needed to reach 2030 EU climate targets after emissions drop 8.3% in 2023, EC says

Greenhouse gas emissions in the EU fell by 8.3% in 2023, driven by significant reductions from power and industrial installations but more efforts are needed for the bloc to meet its 2030 climate targets, the European Commission said on Oct. 31.

This is the largest annual drop in a decade except for 2020, when emissions fell by 9.8% due to the COVID-19 pandemic.

Emissions are now 37% below 1990 levels but the EU’s GDP has grown by 68% in 2023 from 1990, "showing the continued decoupling of emissions and economic growth," the EC added.

The EC also said that "continued" and "further action" is needed for the EU to meet its ambitious target of reducing emissions by 55% in 2030 from 1990 levels.

Analysts at S&P Global Commodity Insights forecast EU emissions would decline by 42% to 2030, and by 82% to 2040.

EU ETS emissions drop

Emissions from power and industrial installations under the EU Emissions Trading System experienced a record decrease of 16.5% in 2023.

This decline was driven by a significant increase in renewable electricity production, primarily from wind and solar, which replaced coal and gas as the bloc’s power sector made substantial progress in decarbonizing its operations.

Currently, EU ETS emissions are approximately 47% below 2005 levels and are on track to achieve the 2030 target of a 62% reduction, according to provisional estimates.

The fall in emissions coincided with a drop in industrial demand, as the EU has faced macroeconomic challenges, including high inflation and weak manufacturing data in recent years. This situation has exerted significant pressure on the EU’s carbon prices, which have experienced a year of low values.

Platts, part of S&P Global Commodity Insights, assessed EU allowances under the ETS for December 2024 at Eur65.65/mtCO2e ($71.34/mtCO2e).

The EU ETS generated revenues of Eur43.6 billion in 2023 for climate action investments, with Eur7.4 billion assigned to the EU Innovation Fund and the Modernisation Fund, and the rest of the money going to Member States directly.