Reduced demand for carbon dioxide emissions in the European Union (EU) suggests that industrial energy consumption may be declining.

Shrouded in the pandemic by a coronavirus, European nations are already shutting down parts of their economy to make people stay home and slow the spread of the virus. As factories and businesses cease their operations or reduce their production capacity, energy consumption declines.

This assertion is also supported by the cancellation of the carbon footprint auction on the European Energy Exchange for bidding below the volume available for sale. This is the first time a sale is canceled since June 2019. After that, the number of allowances dropped by 8.6% to their lowest level since November 2018.

“The dramatic slowdown in economic activity in Europe is shrinking demand”, said Barbara Lambrecht, an analyst at Commerzbank AG. According to her, commodity markets have gone into panic mode.

Reductions in production due to the virus are affecting more and more aspects of the industry. German carmaker Daimler Group said on Tuesday it would stop production in Europe for at least two weeks.

Germany, which is the EU’s largest carbon dioxide pollutant, has reduced its emissions by 6.3% over the past year, marking the largest drop since 2009 in the financial crisis.

In Italy, which is the most affected European country by coronavirus, electricity demand is one fifth lower than a year ago.

Measures against the spread of contagion in Italy, if implemented in the rest of the EU, could shrink energy demand in the bloc by 15%.

The carbon market for options also shows low demand for allowances.

In the face of the global financial crisis more than a decade ago, some industrial companies used free carbon quotas as a form of financing. Most producers not only receive free quotas but also receive them more than a year before they go into use. They can sell spot quotas for money and buy futures, which gives them extra risk free cash flow.

The drop in the number of quotas over the past few days shows that the European manufacturing and energy industry is re-examining its prospects, says Nick Campbell, director at Inspired Energy Plc. He suggests that this trend will become even more apparent in the coming days.