EU moves to reinforce carbon market stability with ETS reform amid energy uncertainty

The European Commission has unveiled a proposal to strengthen the EU Emissions Trading System (ETS) by reforming the Market Stability Reserve (MSR), marking the first concrete step in its upcoming ETS review. The plan would stop the automatic cancellation of surplus allowances above 400 million, instead retaining them as a buffer to address future shortages and limit price volatility. The reform aims to improve predictability for businesses and investors as emissions caps tighten, while supporting the EU’s broader climate goals under the Green Deal and Fit for 55 framework.
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