Emissions from sectors covered by Europe’s carbon market plunged in 2020 due to the Covid-19 pandemic, says the non-profit think tank Sandbag.

Emissions in the EU Emissions Trading Scheme (ETS) in 2020 were 1,377 megatonnes (Mt), down nearly 14% compared with 2019 and 26% below the ETS cap, finds Sandbag’s analysis of European Commission data.

Smoke and vapour billowing from the Bobov Dol coal-fired power plant near the village of Golemo Selo, Bulgaria, in March 2021. (Photo by Nikolay Doychinov/AFP via Getty Images)

The steep emissions decline pushed the surplus of EU emission allowances (EUA) to 1,392Mt. “This huge surplus is bad news for climate action”, and must be addressed by policymakers in the upcoming EU ETS revision, warns Sandbag.

“If the large surplus remains untackled in the upcoming revision, the effectiveness of the EU ETS for achieving the EU’s climate targets in the other sectors will be significantly compromised,” concludes the analysis.

The EUA surplus comes amidst a surge in the price of individual allowances. EUA prices in mid-April hit a record €44, more than double the price from the same time last year.