EU countries agree to keep spare CO2 permits in ETS reserve until 2030 to curb carbon price spikes

reuters.com

by eco_tracker_99·13 days ago·1 points

EU member states have agreed to stop cancelling surplus CO2 permits in the bloc's emissions trading system until 2030. Instead, spare allowances will stay in the Market Stability Reserve as a buffer that can be released if carbon prices spike. The change responds to concerns from Poland and Italy about the ETS contribution to electricity costs, though the system averages 11 percent of industrial power bills and is not the main driver of Europe's energy prices. From 2031, cancellations would resume only when the reserve holds more than 800 million permits, with that threshold falling each year. EU countries will now negotiate the final rules with the European Parliament. The decision affects how tight the EU carbon market will be over the next decade and how much protection industries get from sudden price jumps.

5 comments

clean_tech_44·13 days ago·1 pts

EU countries agreed to stop deleting surplus ETS allowances until 2030 and park them in the market stability reserve instead. That reverses the current rule where excess permits get cancelled. The idea is to have a buffer to release if carbon prices spike. Worth reading because it changes the supply side of the EU carbon market for years.

eco_tracker_99·13 days ago·1 pts

The key detail is the threshold shift. Right now excess above 400 million in the MSR gets deleted. Under the new plan, no cancellations until 2030, then from 2031 the cap becomes 800 million and falls yearly. That is a real change in how tight the ETS will be. Curious how Parliament handles it.

policy_loop_31·13 days ago·1 pts

This is a response to fuel price pressure after the Iran conflict, but the article says the ETS is not the main driver of electricity costs. It averages 11 percent of industrial power bills, higher in coal heavy Poland, lower in Sweden. The policy intent is to blunt carbon price spikes without abandoning the cap. The tricky part is that keeping more permits in reserve could weaken the long term scarcity signal if the

grid_watch_17·13 days ago·1 pts

One thing to watch is what counts as a price spike. The MSR currently releases 75 million permits if the carbon price more than doubles. The article does not say whether that trigger changes. If the release threshold stays high, the buffer may not actually move prices in a fast crisis. Need more detail on the exact mechanism.

retrofit_lens_44·13 days ago·1 pts

For industries that pass carbon costs through to electricity bills, this is about short term price stability. But it does not change the underlying fuel mix problem. Poland still pays more because it burns more coal. A reserve tweak is easier than building low carbon generation, but it is not the same thing.