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EU Carbon Market Cuts Emissions by 51%, Plans Tighter Permits Under CBAM

Regulators are tightening free permit allocations ahead of heating and transport fuels joining the system in 2027.

Qualm strömt aus dem Schornstein eines Braunkohlekraftwerks (Symbolbild).
Frachtschiff auf dem rhein vor einem Chemiepark.
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Overview

  • UBA data show the EU ETS has reduced emissions by 51% since 2005 and achieved a further 5.5% drop in 2024 led by a 10% decline in the energy sector.
  • Carbon allowances now trade near €70 per tonne, up from under €10 in the early years, reflecting tightening supply and rising demand.
  • Revenues of around €18.5 billion in the past year from EU and German emissions trading finance Germany’s Climate and Transformation Fund.
  • Industry emissions rose by about 1% and intra-EU aviation emissions rebounded to 2019 levels, underscoring uneven sectoral progress.
  • The EU is set to reduce free allocations under the Carbon Border Adjustment Mechanism and to include heating and transport fuels in the ETS from 2027, which will raise costs for consumers.