EU ministers have signed off new rules to adjust the market stability reserve for the EU’s second emissions trading system, ETS2, ahead of its planned launch in 2028.
The market stability reserve is designed to balance supply and demand in ETS2 by automatically changing the number of emission allowances available, the Council of the European Union announced on Friday.
The amended rules extend the reserve beyond 2030.
They also double the number of allowances that can be released when the carbon price rises above €45 per tonne of CO2 equivalent (in 2020 prices) — from 20 million to 40 million allowances.
A further change introduces a more gradual release of allowances when the number in circulation falls below 260 million, to avoid sudden shifts linked to a fixed threshold.
What ETS2 covers
ETS2 is the EU’s emissions trading system for buildings, road transport and additional sectors, created under the EU’s “Fit for 55” package in 2023, the Council said.
It is intended to cut emissions from those sectors by 42% by 2030 compared with 2005 levels.
Unlike the EU’s existing emissions trading system, ETS1 — which covers areas such as heavy industry and aviation — ETS2 applies “upstream” to fuel distributors, meaning companies that sell fuels must monitor and report the emissions linked to those fuels and surrender allowances to match them.
The new rules will be signed and published in the Official Journal of the EU and take effect 20 days after publication.
