Report on the functioning of the European carbon market

Summary:

Annual report published by the European Commission on 1 February 2017, setting out the latest developments in the European carbon market.

Further information:

As stipulated by the Directive 2003/87/EC (EU ETS Directive), the objective of this report is to provide a snapshot of developments in the European carbon market on an annual basis. The reports covers the year 2015 but it also presents certain initiatives proposed or agreed in 2016.

In 2015 the EU ETS delivered further emissions reductions in the European Union, remaining the EU's flagship tool for tackling climate change and an effective instrument to cut emissions cost-effectively. The decrease of emissions of greenhouse gases from installations participating in the system by around 0.4% was considered to confirmed the decreasing trend over the previous five years. Also, 2015 marked the first year in which the surplus of allowances that built up in the system since 2009 showed for the first time a material decline.

In July 2015 the Commission presented a legislative proposal to revise the EU ETS for the following decade. In July 2016, the Commission presented a package of measures to accelerate the shift to low-carbon emissions in all sectors of the economy in Europe.