EU carbon market emissions continue a gradual decline in 2025

The European Union’s carbon market is maintaining its long-term downward trajectory, with newly released data confirming a continued drop in emissions across key sectors

According to the latest figures for 2025, emissions covered under the EU Emissions Trading System (EU ETS) fell by 1.3% compared to the previous year.

Since its launch in 2005, the EU ETS has been an important part of reducing greenhouse gas output from power generation, industry, and aviation.

Over that period, emissions in covered sectors have been cut by roughly half, keeping the EU broadly on course to meet its goal of a 62% reduction by 2030.

Renewables growth

The energy sector remains a major driver of emissions reductions, though changes in weather and energy demand influenced 2025 results. Emissions from fossil fuel-based electricity generation dipped slightly by 0.4%, even as overall electricity production rose by 1.7%.

Renewable energy maintained its upward momentum, accounting for 47.3% of the EU’s electricity mix, a marginal increase from 2024. Solar power was one of the standout performers, recording a 24.6% year-on-year increase in generation. This surge was strong enough to offset weaker output from wind and hydropower, both of which were affected by less favorable weather conditions, including lower wind speeds and reduced rainfall in parts of Northern Europe.

Solar energy surpassed hydropower for the first time, becoming the EU’s second-largest renewable electricity source after wind. Despite these gains, fossil fuel generation still increased by 3.5% overall, driven largely by a 11.4% rise in natural gas use. Coal, however, continued its decline, with emissions dropping by 6.8%.

Industrial emissions

Energy-intensive industries also contributed to the overall decline in emissions, with a 2.5% reduction in 2025. A lot of this decrease was linked to lower activity in sectors such as construction, which in turn reduced demand for materials like cement, iron, and steel.

At the same time, structural changes driven by the transition to cleaner energy sources are reshaping industrial processes. While progress varies between sectors, the data suggests that both economic conditions and long-term decarbonisation efforts are influencing emissions trends.

Further analysis is expected to clarify how different industries are adapting and where additional reductions may be achieved in the coming years.

Transport sector

Transport-related emissions presented a more mixed outlook. Aviation emissions rose slightly compared to 2024, largely due to increased air traffic. This reflects continued recovery and growth in the sector, which remains a challenge for climate policy.

Early data from the maritime sector indicates a decrease of around 3% in emissions. However, reporting for both aviation and maritime operators is still ongoing, meaning final figures may shift as more complete data becomes available.

Long-term progress

Overall, the latest figures reinforce the EU ETS as a key tool in Europe’s climate strategy. While the pace of reduction in 2025 was relatively modest, the broader trend remains firmly downward.

The combination of expanding renewable energy, gradual industrial transformation, and policy-driven emissions limits continues to shape the EU’s path toward its climate goals.