EU's GHG emissions drop in Q1 2023 despite rise in GDP: Eurostat

EU greenhouse gas emissions totaled 941 million mtCO2e in the first quarter of 2023, down almost 3% from the same quarter the previous year, Eurostat said Aug. 16.

"This decrease took place simultaneously with a 1.2% increase in the EU's GDP in the first quarter of 2023, compared with the same quarter of 2022," the bloc's statistical agency said in a statement.

The economic sectors responsible for most greenhouse gas emissions during this period were households (24%), manufacturing (20%), electricity/gas supply (19%), agriculture (13%) and transportation and storage (10%).

Emissions in the Q1 2023 decreased in almost all EU countries when compared with the same quarter of 2022, except for Ireland, Latvia, Slovakia, Denmark, Sweden and Finland. The largest declines in GHG emissions were observed in Bulgaria, Estonia and Slovenia.

Emissions in Q4 2022 were 938 million mtC02e, which was down 4% from Q4 2021.

The European Council has set a goal for the EU to cut its GHG emissions by at least 55% by 2030, compared to 1990, and become climate neutral by 2050.

Carbon price boost

The fall in emissions in Q1 took place amid a steady rise in European carbon prices under the EU's Emissions Trading System.

EU Allowances for the December 2023 contract averaged Eur90.13/mtCO2e in Q1 2023, compared to Eur83.09/mtCO2 in Q1 2022, according to data from Platts, part of S&P Global Commodity Insights. EUAs rose to an all-time high of Eur100.23/mtCO2e on Feb. 23, Platts data showed.

Demand for EUAs has also been strong as the European Council recently agreed to reform the ETS, increasing carbon-cutting ambitions to 2030, detailing the removal of free allowances and confirming the inclusion of maritime shipping and a new ETS II for buildings and road transport.

Carbon-pricing schemes, such as the EU's ETS, are considered an effective and economic way to reduce greenhouse gas emissions.

The cap and trade system places a limit on the amount of emissions covered by different sectors, and it includes around 45% of the bloc's total greenhouse gas emissions. Companies can buy and sell carbon permits known as EU Allowances, which can be traded for each ton of CO2 they emit.