Brussels: Carbon dioxide emissions in the European Union’s cap-and-trade program, the world’s largest, fell by the most in five years as warmer-than-average weather curbed demand for gas and power.

Emissions from companies covered by the program dropped 4.9% in 2014 compared with a 5.8% decrease forecast by analysts in a Bloomberg survey. The preliminary EU data implies pollution in the emissions trading system fell to 1.816 billion metric tons, the lowest since the bloc’s carbon market started in 2005, according to Bloomberg New Energy Finance.

Last year was Europe’s warmest on record, according to MDA Information Systems LLC in Gaithersburg, Maryland, whose data goes back to 1981. Power prices in Germany, the largest European economy, fell for a fourth year as renewable energy’s share of the nation’s electricity use rose to almost 28% in 2014, the government said 5 March.

“The majority of the fall in emissions stemmed from the power sector where greenhouse-gas output fell in light of an abnormally warm year," said James Cooper, an analyst at New Energy Finance in London. “An increase in renewables generation was also a factor."

Emission permits for December approached a one-week high of €7.15 euros ($7.69) a metric ton before paring gains to €7.11 on ICE Futures Europe as of 11:24am. in London. Prices are 70% lower than at the start of 2008 amid a record glut of permits, which built as economies slowed amid the euro- zone crisis, weighing on demand.

Permit glut

The EU’s emissions trading system, covering about 12,000 installations owned by utilities and manufacturers, is the bloc’s main policy tool to reduce greenhouse gas discharges. It imposes decreasing pollution caps on power producers and industries from cement to paper.

After a glut of allowances pushed prices to levels that fail to deter industry from burning coal, the EU enacted last year a rescue plan to withhold 900 million allowances from auctions. It was followed by a draft measure to control supply through a so-called market stability reserve, which is currently being considered by EU governments and the European Parliament.

“We expect the price volatility seen in the wake of the release to be relatively short-lived as the EU ETS reform agenda recaptures the headline," Cooper said.

The commission, the 28-nation EU’s executive arm, today granted access to 2014 emissions data at installation level. No interpretation will be made available, it said on 1 March. The data covers 86% of stationary installation, excluding aviation, according to New Energy.

Power generation

EU ETS emissions from power generation fell 8.6% last year on a like-for-like basis, as demand for electricity contracted 2.5%, according to New Energy. Renewables, excluding hydro energy, provided 16% of power generated in the EU, up from 14% in 2013, the analysts estimated.

Germany, the biggest emitter in Europe, shrank its pollution for the first time in three years in 2014, the government said Tuesday. Total greenhouse-gas emissions, including discharges outside the ETS, dropped 4.3% to 912 million tons of carbon dioxide equivalent, the lowest level since 2010, according to the environment ministry.

“Much of the reduction in 2014 was due to the mild winter," environment minister Barbara Hendricks said in a statement. “But we owe a part of the decline to real progress on climate protection." Bloomberg

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