The European Union has approved new price stability measures for the ETS2 carbon market, which covers buildings, road transport, and small industry. The rules aim to prevent sharp price spikes that could hit households and small businesses. The mechanism includes a reserve that can release extra allowances if prices rise too fast, and a floor to prevent a collapse in carbon prices. This move addresses a key concern about carbon pricing: that volatile allowance costs could undermine public support for climate policy. By capping price swings, the EU hopes to keep heating and fuel costs predictable while still pushing emitters to cut pollution. The ETS2 is set to launch in 2027, and these controls are meant to smooth the transition for consumers.
