CO2 emissions from the industrial sectors led to a year-on-year drop in 2025 under the EU Emissions Trading System, according to verified European Commission figures released in April.
Overall CO2 output from the regulated sectors fell by 1.3% in 2025 from 2024, continuing a downward trend seen since Europe’s carbon market was launched in 2005.
However, emissions from electricity generation – one of the largest single sectors — fell by only 0.4% in 2025, the figures showed. It was the heavy industries where the more significant reduction in emissions took place, falling 2.5% from 2024 levels.
The bulk of those reductions took place in cement, iron and steel production, said the EC, which acts as the EU’s carbon market regulator.
One factor behind this drop was slower activity in construction and other sectors, the EC said.
“Data available at the reporting deadline [31st March] indicates this reduction results in part from a reduction in activity in the construction sector and other economic activities, as well as from the transformation of industries as a result of the clean energy transition,” the EC said in a statement, adding that further analysis was ongoing.
Meanwhile, CO2 emissions from the power sector fell slightly, reflecting a greater share of renewable energy in the electricity mix. Solar power generation showed a strong increase in 2025, negating a drop in wind and hydro power, according to the EC.
In the transport sectors, CO2 emissions from aviation increased slightly in 2025, reflecting growth in air traffic compared with the previous year, while initial data from the maritime sector showed that CO2 emissions from shipping fell by around 3% year-on-year.
In summary, the latest figures show that the drop in CO2 emissions in 2025 was linked to both a slowdown in activity in the construction sector as well as an ongoing transition to cleaner fuels in Europe’s industrial sectors.
The latest figures add to the ongoing reduction in emissions from the sectors regulated by the EU ETS. Overall emissions under the scheme are down by more than 50% since 2005 levels.
The EU ETS is a legally binding compliance carbon market that regulates CO2 emissions from around 11,000 individual power stations and factories across the EU countries, as well as in non-member states Norway, Iceland and Liechtenstein.
To find out more about how the EU ETS works, check out our Visual Learning asset: How the EU ETS Works – Carbonwise.
Ever wondered about which sectors are the major sources of emissions at the global level? Find out more about the share of each sector here: Global Greenhouse Gas Emissions by Sector – Carbonwise
