Carbon emissions within the European Union's Emissions Trading System rose 3.4% in 2010 compared with a year earlier due to stronger economic activity, according to an average of three analysts' calculations of preliminary and incomplete data released by the European Commission Friday.

According to an average of calculations from Deutsche Bank, SocGen and Tshach-Solutions, carbon emissions in the ETS in 2010 were 1.941 billion metric tons, compared with 1.877 billion tons in 2009.

"Countries with the largest change were Spain and Portugal who were down 11% and 13% respectively," said Jan Frommeyer, managing director of Tshach-Solutions. "This is mainly due to the reduction in their power emissions which were down 22% in Spain and 29% in Portugal , this was because their usage of renewable energy increased extensively."

Emissions in Germany and Poland rose more than expected as their economies recovered. Smaller countries like Latvia and Estonia were also up, but it isn't yet clear why, the analysts said.

No data was available from Malta and Cyprus , while Bulgaria , Greece , the Czech Republic and Romania provided incomplete data, analysts said. One analyst estimated that the data were around 90% complete. In previous years, it has been about 80% complete.

The data are incomplete due to some countries either not reporting at all or providing partial data. The commission didn't provide any explanation of the data, which will change as more information becomes available.

A European Commission spokesman said more data is expected to trickle in next week.

Deutsche Bank carbon analyst Isabelle Curien said that emissions were up more than expected in the power sector, while refining was the only sector to show a decrease in emissions as refinery capacity shrank in Europe .

All analysts said the data confirm there are too many allowances in the market.

The commission uses the data to guide policy and to verify compliance in member states.

The ETS is the EU's flagship program to curb emissions. It puts a price on carbon aiming to stimulate investment in clean energy and green technologies.

However, the system has faced repeated setbacks due to frauds and thefts of allowances. Experts also believe there are too many allowances on the market, limiting price increases and undermining the incentive to invest in green technologies.

The ETS will be upgraded in 2013, with the inclusion of more sectors and the auctioning of many of the allowances that are currently given out free.

At the moment, it covers around 11,000 installations such as power plants, oil refineries, iron and steel plants as well as cement, glass, lime, bricks, ceramics, pulp, paper and board makers.

Starting in 2013, the total number of allowances on the market will start decreasing every year so the EU can reduce emissions 20% by 2020 compared with 1990 levels.

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