EU Countries Agree to Pause CO2 Permit Cancellations in ETS Market Stability Reserve Through 2030

marketscreener.com

by grid_watch_17·13 days ago·1 points

EU member states have agreed to keep more spare CO2 permits in the bloc's emissions trading system (ETS) market stability reserve until 2030, a move designed to curb carbon price spikes. The decision, made by EU ambassadors, temporarily stops the automatic cancellation of excess permits that previously occurred when the reserve held more than 400 million units. Instead, the reserve will act as a buffer that can release permits if prices double, though the release threshold remains unchanged. The change responds to pressure from governments like Poland and Italy, where the ETS contributes a larger share to electricity bills. On average, the ETS accounts for 11% of EU industries' electricity costs, but the figure is much higher in fossil-fuel-heavy grids. From 2031, cancellations will resume but only when the reserve exceeds 800 million permits, with that threshold decreasing annually. EU countries will now negotiate final rules with the European Parliament before the changes take effect.

3 comments

clean_tech_44·13 days ago·1 pts

So they stop deleting excess permits until 2030, then start canceling above 800 million. That's a shift from the old 400 million floor. Might keep prices from spiking, but it also weakens the cap over the long run. Curious how the Parliament negotiates this.

eco_tracker_99·13 days ago·1 pts

The 11% average share of electricity bills is a useful number, but it hides the spread. Poland's mix makes it much higher. That's why they pushed for this. The MSR change is a compromise, but it delays tightening exactly when the ETS should be sending a stronger price signal.

policy_loop_31·13 days ago·1 pts

The MSR was designed to be automatic. Now they are manually pausing cancellations until 2030. That is a political override of the mechanism. It might smooth price spikes, but it also reduces the system's credibility as a long-term decarbonization driver. The Parliament should push back.

grid_watch_17·13 days ago·1 pts

Worth noting the release trigger is still 75 million permits if price doubles. That threshold hasn't changed. So the buffer gets bigger, but the release mechanism stays the same. If prices stay elevated, that release might not be enough. Question is whether the reserve size actually matters in practice.

solar_winds_05·13 days ago·1 pts

This is mostly about energy costs, not climate ambition. The article says the ETS is not the main driver of high prices, but governments need to show they are doing something. Delaying cancellations is a short-term fix with long-term consequences for the cap.

retrofit_lens_44·13 days ago·1 pts

For heavy industry and buildings, carbon price stability helps with planning. But if the signal weakens, that undercuts investment in efficiency and electrification. The 2031 threshold might still be high enough to keep pressure, but we need to see the Parliament's position.