Emissions higher than expected. Verified data so far show emissions 4.6% above our model forecast, when excluding Spain.
Incomplete dataset. Several countries are still missing—including Poland, Romania, Hungary, Bulgaria, Portugal, Latvia, and Cyprus—so the final outcome remains uncertain.
Spain excluded. Reported emissions for Spain are listed at just 39 MtCOâ‚‚, less than half of the 2023 estimate for buildings and transport alone (102 Mt, Eurostat). The figure is almost certainly incomplete, and we exclude it from our error assessment until more reliable data are available. (If Spain is included, verified emissions are 2.5% below our model forecast.)
Deviation above ETS1 levels. The 4.6% gap is higher than the typical 1–2% error margin observed in ETS1. Given that ETS2 is a new system without historical reference points, this margin is not unexpected.
Our country-level errors do not move in the same direction, though in many cases reported emissions appear higher than our estimates. One likely reason is that our 2024 projections were extrapolated from 2023 values using the 2022–23 decline rate. Because that drop was unusually steep, the implied 2023–24 decline may have been overstated, leading us to underestimate current emissions. Additional uncertainty stems from the industry sector, where both the magnitude and the geographical distribution of emissions remain unclear. We are investigating these issues further.
As with any release of newly available data, we have refined our forecast to provide greater accuracy and clarity in this emerging market. We will incorporate the verified emissions into our modelling over the coming weeks. All else equal, higher-than-expected emissions imply somewhat more bullish pressure on ETS2 prices than in our current outlook.
We are also working to further improve our estimates by:
Incorporating more frequently updated data on technology uptake, allowing us to better capture near-term shifts in emissions trajectories.
Developing a detailed model of small industry emissions, since our current estimates are based on ETS1 trajectories and may not reflect ETS2 realities.
The Netherlands was the first country to publish its verified ETS2 data earlier this year. That release already pointed towards higher-than-expected emissions (10% above our modelling) and emissions concentrated among a few large players. In 2024, the top 25 entities account for around 75% of Dutch ETS2 emissions, with Shell alone responsible for more than 4 MtCOâ‚‚.
A key conclusion is that it will be difficult to disentangle where these emissions originate. Many of the largest reporting entities supply both oil and gas, and their activities span transport, buildings, and smaller industrial consumers. This makes it challenging to draw a clear line between demand from the different sectors covered under ETS2.
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