EU cuts ETS emissions 2% in 2025 as revenues hit €43.2 billion

Emissions covered by the EU's Emissions Trading System fell 2% in 2025, while revenues increased 11% compared to the year prior, the EU Commission said Nov. 9.

This comes amid a broader 1.6% drop in greenhouse gas emissions across the bloc, according to the latest Climate Action Progress Report, published concurrently with the annual Carbon Market Report, which provides a comprehensive account on the performance of the EU ETS.

This year's report showed that revenues generated by the bloc's flagship carbon market grew to €43.2 billion, with more than half of the revenues – €23.9 billion – earmarked for EU member states to support finance climate, energy and social measures to support households and companies in transitioning away from fossil fuels.

Total GHG emissions were reportedly down 39% compared to 1990 levels, while the EU economy grew by 74% over the same period, said the EC.

"Europe is stepping up, not slowing down," said Wopke Hoekstra, EU Commissioner for Climate, Net Zero and Clean Growth. "The EU's emissions continue to fall and use of clean technologies is expanding across the economy."

He added that the climate crisis is also gathering pace, and that climate action, competitiveness and independence are closely linked.

"By accelerating the transition to clean, home-grown energy, we can cut emissions, strengthen our resilience and reduce our dependence on imported fossil fuels. The next step is faster implementation and investment in EU cleantech across Europe," he added.

The EC said that greater efforts will be required to achieve the bloc's 55% reduction targets by 2030. The report indicated that emissions covered by the Effort Sharing Regulation, including domestic transport, buildings, agriculture and waste, are currently expected to fall by around 38.5% by 2030 compared with 2005, slightly below the EU-wide target of 40%.

The report further highlighted that nine member states were lagging on targets, including Austria, Croatia, Cyprus, Germany, Italy, Ireland, Lithuania, Malta and Sweden. The EC said it would request that "each [member] submit a corrective action plan to accelerate the implementation and development of emission reduction measures and investments."

Separately, the provisional data showed that net carbon removals from the land sector increased by about 11% in 2025, with current projections indicating a gap of 40 million–55 million metric tons of CO₂ equivalent towards the EU's 2030 land-use target.

Clean energy growth

Clean technology deployment contributed towards the bloc's progress in phasing out fossil fuel dependency, the report showed, citing increasing registrations of battery-electric cars which stood at 1.9 million in 2025, the equivalent of roughly one in six new car registrations.

"EU wind and solar capacity increased to 611 GW, or around 49% of total electricity generation capacity," the EC said. "The installation of heat pumps also accelerated, with estimated 41 GW of additional capacity installed in 2025, up from 26 GW in 2024."

Separately, the report showed that green bond issuance reached €287 billion in 2025, while in 2024 companies invested €273 billion in domestic environmentally sustainable activities.

Major financing programs such as the bloc's Innovation Fund backed around 240 projects, while the Modernisation Fund distributed €20.7 billion across beneficiary states by the end of 2025. The Social Climate Fund is expected to mobilize at least €86.7 billion by 2032 to support the most vulnerable people and micro-enterprises.

Meanwhile, ETS-covered emissions from industrial installations decreased by 3.3% from 2024, mostly driven by the iron and steel, cement, and chemical sectors, said the EC.

Maritime emissions decreased by 4% while aviation emissions grew by 0.2%, with the EC stressing the need to decarbonize the latter.

This comes as officials in Brussels work to revise the rules underpinning the carbon market, following a July proposal put forward by the Commission, covering the 2030-2040 period.

Platts, part of S&P Global Energy, assessed the price of benchmark nearest-December 2026 EU Allowances at €86.69/mtCO2e Nov. 6.