MEP Cyrus Engerer (S&D, Malta) will present his draft report on the review of the market stability reserve (MSR) as part of the EU Emissions Trading System (ETS) on Thursday 13 January at a meeting of the European Parliament's Committee on the Environment, Public Health and Food Safety (ENVI).
Operational since 2019, this reserve aims to address the current surplus of allowances in the ETS and to increase the resilience of the system to shocks by regulating the supply of allowances that can be auctioned.
More precisely, it is a mechanism that allows for an automatic adjustment of the number of allowances in circulation according to a predefined ‘intake rate’ that determines the share of allowances in circulation that will be put into the reserve.
Currently set at 24%, this rate is to be reduced to 12% (its previous level) from 2024 under EU Directive 2018/410, and applies only if the total number of allowances in circulation exceeds 833 million. In addition, the minimum quantity of allowances to be placed in the reserve was set at 200 million, double the previous threshold of 100 million.
As part of the reform of the ETS presented on 14 July 2021, the European Commission has proposed to maintain the current parameters of the MSR (24% allowance rate and a minimum quantity of 200 million allowances to be set aside) until the end of phase IV of the ETS, i.e. 31 December 2030, in order to ensure market predictability (see EUROPE 12768/2).
Mr Engerer seems to be satisfied with the Commission's proposal, as his draft report does not foresee a review of these parameters.
See the draft report: https://bit.ly/3fbkAdO (Original version in French by Damien Genicot)