Members' Research Service By / February 3, 2022

Revision of the market stability reserve for the EU emissions trading system: Fit for 55 package [EU Legislation in Progress]

Established in 2015 by Decision (EU) 2015/1814 (MSR Decision) and amended by Directive (EU) 2018/410, the market stability reserve (MSR) was introduced as a means to align the supply of emissions allowances more closely with demand, and enhance the resilience of the ETS.

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Written by Henrique Morgado Simões (3rd edition, updated on 03.05.2022).

The proposal to revise the market stability reserve (MSR) for the EU emissions trading system (ETS) consists of prolonging its current parameters. Under the current rules, the intake rate of allowances to the MSR and the minimum allowances placed in the reserve have been doubled until the end of 2023, to allow for a quick removal of surplus EU ETS allowances. The proposal is aimed at maintaining the current doubled intake rate (24 %) and minimum number of allowances placed in the reserve (200 million) until 31 December 2030, the end of Phase IV of the EU ETS.

In Parliament, the file has been assigned to the Committee on the Environment, Public Health and Food Safety (ENVI). The committee adopted its report on 15 March 2022, with 65 votes in favour, 20 against and one abstention. During the plenary sitting of 5 April 2022, the Parliament adopted, with amendments to the recitals, the institution’s position for negotiations, by 490 votes in favour, 127 against and seven abstentions. The Council is currently debating the proposal. Its December 2021 progress report notes delegations’ differing views.

Versions

Proposal for a decision of the European Parliament and of the Council amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030.
Committee responsible:Environment, Public Health and Food Safety (ENVI)COM(2021) 571
14.7.2021
Rapporteur:Cyrus Engerer (S&D, Malta)2021/0202(COD)
Shadow rapporteurs:Cristian‑Silviu Buşoi (EPP, Romania)
Emma Wiesner (Renew, Sweden)
Michael Bloss (Greens/EFA, Germany)
Alexandr Vondra (ECR, Czechia)
Silvia Modig (The Left, Finland)
Ordinary legislative procedure (COD)
(Parliament and Council on
equal footing – formerly ‘co-decision’)
Next steps expected: Launch of trilogue negotiations
Stage: Trialogue

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  • […] The EU’s law-making representative body, the European Parliament, is set to assemble next week on May 16 th and will be voting on modifications to the “Suitable for 55,” the roadmap for emissions decrease of a minimum of 55% by 2030, reported KraneShares in the Environment Market Now blog site. The reforms will target the EU Emissions Trading System (EU ETS), and propositions consist of changing the emissions cap, presenting a more aggressive yearly decrease of the cap, and stiffening the marketplace Stability Reserve that offers cost stability and works to line up need and supply of allowances, per the European Parliamentary Research Study Service […]

  • […] The EU’s law-making representative body, the European Parliament, is set to convene next week on May 16th and will be voting on amendments to the “Fit for 55,” the roadmap for emissions reduction of at least 55% by 2030, reported KraneShares in the Climate Market Now blog. The reforms will target the EU Emissions Trading System (EU ETS), and proposals include adjusting the emissions cap, introducing a more aggressive annual reduction of the cap, and stiffening the Market Stability Reserve that provides price stability and works to align demand and supply of allowances, per the European Parliamentary Research Service. […]

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