Economic crisis producing huge drop in EU CO2 emissions

EU emissions dropped from 2.24 billion in 2007 to 2.11 billion in 2008, the institute organisation said in a statement.

The institute said that this was the result both of the economic slump but also that the ETS was forcing companies to switch to cleaner technologies.

"[The data shows that] the recession is leading to lower emissions, with both industry output and power demand down," said Kjersti Ulset, of Point Carbon.

"But they also show that the carbon market works as intended," she continued. "The emission reductions we see in the power sector are partly a result of the high carbon price we had for the first half of 2008."

Nevertheless, the sectors with the largest declines in greenhouse gas emissions are those that have been hit hard by the crisis, including the cement, lime and glass sector and pulp and paper producers, according to Point Carbon, both of which saw drops of nine percent in emissions.

Power and heating are down six percent, while oil and gas and the metal sectors were down one percent each.

Across Europe, the country with some of the biggest declines is also the one of the EU member states worst hit by the recession, Spain, whose CO2 emissions nose-dived a full 12.9 percent.

By comparison, the EU as a whole last December agreed to a target of reducing its emissions by 20 percent on 1990 levels by 2020. Spain has managed to achieve over half that 12-year target in 12 months.

Thus critics of the ETS contested the analysis that the data showed that the ETS is working to reduce emissions.

"The fall in EU emissions is the product of falling production rather than emissions trading. This welcome news for the climate comes with an unsustainable social cost and should not divert us from the need for green public investment, better regulation, and a planned transition to a low-carbon future," Oscar Reyes, of Amsterdam-based environmental NGO Carbon Trade Watch told EUobserver.

"The carbon market is incapable of achieving this, while the recent collapse of carbon prices has shown how counter-productive it is: Polluting industries were given a lifeline through cashing in their unwanted permits, while the 'price signal' that was meant to change their ways has been rendered largely meaningless.

"In fact, if you study the 2008 data, the main beneficiaries from the ETS are the major emitters," he added.

"ArcelorMittal, which has the most surplus credits, looks to have gained up to half a billion euros from the scheme last year. It has also been claiming credits for factories where temporary closures are in place, which is hardly the same as taking pro-active steps to reduce emissions."

The commission is expected to release its own analysis of the data in May.