A letter addressed to Commissioner Hoekstra and Commissioner Jørgensen from the European Environmental Bureau, Climate Action Network Europe and the LIFE Effect consortium – to which Carbon Market Watch is a member – relating to ideas for a reform of the ETS2, in particular the MSR2, as proposed by a recent non-paper signed by 16+ Member States.
This explainer highlights the risks such changes will create in terms of generating higher emissions and the dangers politically of opening up different legislative instruments.
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.
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