Greenhouse gas emissions down sharply as result of crisis

But the emissions trading mechanism had less to do with the drop than the overall decline in industrial and energy production as a result of the fall-out from the economic crisis.

"Due to the crisis the significant drop in emissions does not come as a surprise," said climate action commissioner Connie Hedegaard. "The EU has a functioning trading system driving emission reductions even during a recession. We should not hide that the recession has significantly weakened the price signal."

"The carbon market can and should be a stronger driver for low-carbon investments. And we must also realise that because of the crisis it suddenly became easier to reduce emissions and that is good."

"Unfortunately that also means that European business did not invest nearly as much as planned in innovation, which could harm our future ability to compete on promising markets."

Beyond the reduced economic activity as a result of the recession, the commission says the main reason for the drop was also due to the low level of gas prices throughout 2009 which has made it much more attractive to produce power from gas rather than more emitting coal. The lower gas prices themselves were likely a result of the downturn.

Nevertheless the carbon price in the ETS "has surely also resulted in companies changing behaviour and reducing emissions," the commission said in a statement.

In April last year, it was reported that the industrial output collapse had resulted in show a reduction of EU carbon emissions for 2008 of six percent on 2007.