ETS Market Stability Reserve to Reduce Auction Volume by Almost 400 Million Allowances
Brussels, May 15. The European Commission published today the total number of allowances in circulation on the European carbon market. It amounts to over one million allowances. The possibility to monitor of the surplus of allowances in circulation transparently and predictably is fundamental for the functioning of the EU Emissions Trading System (EU ETS) and the Market Stability Reserve (MSR).
The revised EU ETS Directive, establishing the architecture of the EU ETS for the next decade, provides for doubling the rate at which allowances will be placed in the reserve between 2019 and 2023. Thus, based on the indicator published today and on the provisions of the revised legislation, auction volumes from September 2019 to August 2020 will be reduced by less than 400,000 allowances, corresponding to 24% of the total number of allowances in circulation.
The MSR entered in force last January and is the main tool for the Commission’s long-term strategy to address allowances surplus. Unallocated allowances will be transferred to the reserve, stabilising the carbon price in the EU. The exact amount will only be known in 2020. The MSR is an independent entity which operates entirely according to pre-defined rules that leave no discretion to the Commission or Member States in its implementation.
The next publication of the total number of allowances in circulation will take place by 15 May 2020.