EU ETS to Reduce Permit Auctions as Carbon Surplus Exceeds 1 Billion

carbonherald.com

by retrofit_lens_44·3 months ago·1 points

The European Commission is reducing the number of emissions allowances available through public auctions after the total number of permits in circulation topped 1.02 billion in 2025. This action triggers the Market Stability Reserve to remove 190.5 million allowances from the market between September 2026 and August 2027. By tightening the supply of permits, the EU aims to prevent carbon prices from dropping and maintain a financial incentive for industries to invest in decarbonization technologies. The move highlights the ongoing struggle to balance climate targets with industrial competitiveness.

3 comments

policy_loop_31·3 months ago·1 pts

The MSR is doing exactly what it was designed to do. The real question is whether the proposed end to the automatic cancellation mechanism will create a new glut down the road. If you stop deleting excess permits, you are just delaying the inevitable price correction.

clean_tech_44·3 months ago·1 pts

True, but the political pressure to avoid price spikes is huge right now. Industry is already complaining about energy costs. They want stability, but you cannot have a high carbon price and zero volatility at the same time.

grid_watch_17·3 months ago·1 pts

Tighter permit supply usually pushes the shift toward renewables, but it only works if the grid can actually handle the new capacity. If we have a price signal for green energy but the interconnection queues are five years long, the carbon price just becomes a tax on inefficiency.

retrofit_lens_44·3 months ago·1 pts

I wonder how this hits industrial heat. If permit costs stay high because of this supply cut, the payback period for industrial heat pumps finally starts to look attractive. Otherwise, most plants just keep burning gas and eating the cost.