EU industrial emissions fall as carbon market revenues reach €43.2 billion

Greenhouse gas emissions from industrial installations covered by the EU Emissions Trading System (ETS) declined by 3.3% in 2025, with the iron and steel, cement and chemical industries accounting for much of the reduction. At the same time, revenues from the European carbon market increased to €43.2 billion, providing additional funding for decarbonisation investments.

Presenting the European Commission's 2026 Climate Action Progress Report and Carbon Market Report on November 9, European Commissioner for Climate, Net Zero and Clean Growth Wopke Hoekstra emphasised that reducing emissions and strengthening industrial competitiveness must go hand in hand.

"Europe is stepping up, not slowing down," Hoekstra said, pointing to declining emissions and the growing deployment of clean technologies across the European economy.

Steel industry contributes to lower industrial emissions

According to provisional data, EU net greenhouse gas emissions fell by 1.6% in 2025 compared with the previous year. Emissions are now 39% below their 1990 level, while the EU economy has grown by 74% over the same period.

Emissions covered by the EU ETS declined by approximately 2%, while industrial installations recorded a stronger reduction of 3.3%, primarily driven by the steel, cement and chemical sectors.

However, the Commission acknowledged that the overall pace of emission reductions has slowed compared with previous years. Further progress will therefore be necessary to achieve the EU's climate objectives.

For European steelmakers, the transition presents a particular challenge: reducing emissions through new production technologies while remaining competitive in international markets.

Hoekstra stressed that environmental and economic objectives should not be viewed separately. "Climate action, competitiveness and independence go hand in hand," he said.

Carbon market revenues support industrial transformation

The EU ETS generated €43.2 billion in revenues in 2025, an increase of 11% compared with 2024. Of this amount, €23.9 billion went directly to Member States to finance decarbonisation measures for households and industry.

The Commission considers these revenues an important source of funding for the transition towards lower-emission production processes.

For energy-intensive industries such as steelmaking, access to investment funding and competitively priced electricity remains crucial to implementing new technologies.

Renewable energy deployment continued to expand in 2025, with combined wind and solar capacity reaching 611 GW, equivalent to approximately 49% of the EU's total electricity generation capacity.

Hoekstra also highlighted the importance of reducing Europe's dependence on imported fossil fuels. Accelerating the transition to domestically produced clean energy, he argued, would strengthen economic resilience while helping industry manage exposure to volatile international energy markets.

Faster implementation needed to reach 2030 targets

Despite the progress recorded in 2025, the Commission warned that emission reductions must accelerate during the second half of the decade.

The EU remains committed to reducing net greenhouse gas emissions by at least 55% by 2030 compared with 1990 levels. A legally binding target of a 90% reduction by 2040 entered into force earlier this year.

Under the existing ETS framework, emissions in covered sectors are to fall by 62% by 2030 compared with 2005 levels. The Commission also proposed reforms to the system in July 2026 for the period from 2030 to 2040.

Hoekstra called for greater investment in European clean technologies and faster implementation of existing climate policies, arguing that the transition could contribute to a stronger industrial base.

Source and Photo: European Commission