Introduced in 2018, the Market Stability Reserve (MSR) functions as the oversupply control mechanism of the EU Emissions Trading System (ETS). Created to address structural oversupply on the market, every year it extracts a share of surplus emissions allowances. The MSR came to the rescue of the misfiringETS by ending a decade of low market confidence and rock bottom prices. In practice it has proven effective, syphoning oversupply out of the system and invalidating (or deleting) over 3.4 billion EU Allowances (EUAs).
In this joint letter to the European Commission, Carbon Market Watch and allied NGOs demand that the EU executive refrain from meddling with the Market Stability Reserve, which underpins the EU’s Emissions Trading System and safeguards the carbon price by soaking up excess liquidity in the market.
A dangerous approach to addressing high ETS2 prices would be to reform the Market Stability Reserve prematurely – before the real price signal and emission levels in the market become clear and without considering the environmental implications of the additional allowances that would enter the market and risk exceeding the ETS2 emissions cap.
The recent drop in prices on the EU’s Emissions Trading System (EU ETS) threatens to slow industrial decarbonisation and to deprive state treasures of urgently needed funds for climate action.
We write to MEPs to express our grave concern about the European Commission’s proposal to generate EUR 20 billion from the auctioning of allowances held in the Market Stability Reserve (MSR) of the EU Emissions Trading System (ETS) in order to finance measures under the REPowerEU plan, including gas and oil infrastructure. Together with our …
Read more “Urgent call to veto Commission proposal on releasing allowances from the market stability reserve to finance REPowerEU measures”
This policy paper complements the briefing “A New Hope – recommendations for the EU Emissions Trading System review” Introduction: The EU Emissions Trading System (EU ETS) has been hampered by a historical oversupply since its inception. Since 2019, some of the excess allowances are being absorbed by the Market Stability Reserve (MSR), and a portion …
Read more “How can the EU Emissions Trading System support a union-wide coal phase-out”
BRUSSELS 20 September 2019. The EU carbon market is currently unfit to accommodate national coal phase-outs scheduled in Europe. EU policymakers should combine coal plant closures with the cancellation of pollution permits and strengthen the market stability reserve to absorb more surplus pollution permits off the market. Failing this, the market will be flooded with …
Read more “Over 2 billion surplus pollution permits could flood Europe’s carbon market by 2030 – analysis”
Executive summary 12 European countries have committed to closing down coal-fired power plants over the coming years. In order to do their part in limiting the global temperature rise to 1.5°C above pre-industrial levels, all EU countries will have to follow on this path and phase out coal by 20301. While this is an urgent …
Read more “Avoiding A Carbon Crash: how to phase out coal and strengthen the EU ETS”
