EU members agree market stability reserve for EU ETS

• 8 years ago (2015-05-06)
• Junior Isles

Europe 1061 Renewables 751

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The EU-28 Member States and the European Parliament have agreed to introduce a market stability reserve in 2019 to tackle a glut of over 2 billion excess permits in the EU Emissions Trading Scheme (ETS).

Policymakers have also agreed to transfer the backloaded and unallocated allowances into the market stability reserve before they flood the market at the end of the decade. The number of these allowances could be as high as 1.7 billion according to analyst estimates.

The surplus of allowances is currently suppressing the carbon price and failing to hold Europe’s worst polluters to account over their emissions.

Philipp Ruf, Lead Carbon Analyst at ICIS Tschach commented: “Towards the end of the third trading period (2013-2020) we expect prices to increase above €20 and then evolve above €30 in the beginning of the next decade. For 2030 we see prices at around €40, meaning that the price increases flatten in the period 2021-2030 which achieves one of the MSR objectives: a more stable carbon price.”

Ivan Pineda, Director of Public Affairs at the European Wind Energy Association, said: “The start date of 2019 shows that Member States are prepared to compromise. But we have to acknowledge that Member States and the Parliament could have been far more ambitious in the shake-up of the carbon market and that much more comprehensive reform is needed in order for this instrument to provide a meaningful signal to investors.”

The compromise now has to go through both the European Parliament and Council of the EU.