Germany Wants a Tighter EU Carbon Market Reserve to Avoid Permit Glut

Germany is pushing for a tighter EU carbon market reserve before member states finalize their position. The proposal would strengthen the Market Stability Reserve by reducing the surplus trigger from 833 million to 650 million allowances, keeping the absorption rate at 24%, and shrinking the threshold by 4% per year from 2028. That is more aggressive than the Irish presidency's compromise, which would let excess allowances sit in the reserve until 2030. The outcome matters for EUA prices and for the credibility of the emissions cap. If the reserve absorbs too many permits, prices may stay high and industry faces higher costs. If it absorbs too few, a glut can push prices down and weaken the signal to cut emissions. The article explains the split among member states and why the talks are running longer than planned.