The main reason is the increase in renewable energy production and the decrease in output from fossil fuel-powered power plants. Specifically, emissions from power plants fell by 24 percent compared to 2022.

These sectors are covered by the European Union Emissions Trading System (ETS), and this represents the fastest emissions decline since the system's inception.

Previously, the fastest annual decline occurred in 2020, when ETS-covered emissions fell by 13.3 percent. Emissions rose by 7.3 percent in 2021 and fell again in 2022 by less than two percent.

"ETS emissions are now about 47 percent lower than in 2005 and are on track to achieve the goal of reducing emissions by 62 percent by 2030," stated the European Commission in a press release.

Last year, ETS covered 45 percent of all EU greenhouse gas emissions, including electricity production, industry and part of aviation. In 2024, the scheme was extended to include shipping.

According to the Commission, the reduction in carbon emissions from power plants is due to the adoption of wind and solar energy. However, Veyt, a company analyzing the energy market, says that a contributing factor was also the reduced demand for electricity due to economic difficulties.

"The decrease in demand for electricity could turn into an increase as the economy recovers," said Veyt analyst Ingvild Sørhus, adding that long-term trends for emissions reduction remain.

"The development of renewable energy capacities and the phasing out of coal are structural and likely to persist," Sørhus stated.

Emissions related to the industry fell by 7 percent last year, behind which the Commission sees improvements in energy efficiency, but also a decrease in production volume.

European companies suffer from high interest rates, increased energy prices, inflation and decreased demand. For these reasons, Sørhus believes that the decrease in emissions associated with the industry in 2023 does not mean that industrial companies will be able to meet their climate targets in the future.

Carbon emissions from the aviation sector increased by 10 percent compared to 2022, which is part of the sector's ongoing post-pandemic recovery, said the European Commission.

Estonia's energy generation emissions have also been shrinking rapidly as power from Eesti Energia's oil shale power plants increasingly fails to make the market due to its higher price. Eesti Energia CEO Andrus Durejko recently said that while the widespread production of electricity from oil shale in Estonia is undoubtedly coming to an end, the current oil shale plants may still be needed for reserve capacity and network services.

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