The European Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI) adopted by a large majority (65 votes in favour, 20 against and one abstention) on Tuesday 15 March the draft report by Cyrus Engerer MEP (S&D, Malta) on the revision of the ‘market stability reserve’ (MSR) under the EU Emissions Trading System (ETS).
This is the first vote in Parliament on the package of legislative proposals to enable the EU to reduce its net greenhouse gas (GHG) emissions by at least 55% by 2030 (‘Fit for 55 package’).
The adoption of Mr Engerer’s draft report comes only two months after its presentation to the ENVI Committee on 16 January, during which many MEPs had insisted on the need to avoid any politicisation of this highly technical issue (see EUROPE 12868/12).
Maintain current metrics
Introduced in 2019 to address the surplus of allowances in the ETS, the ‘market stability reserve’ allows for an automatic adjustment of the number of allowances in circulation according to a predefined intake rate that determines the share of allowances that will be placed in the reserve.
While the rate was to be reduced to 12% (its previous level) starting in 2024 under EU Directive 2018/410, MEPs and the Commission want to keep it at 24% until the end of phase IV of the ETS, i.e. 31 December 2030.
The same applies to the minimum quantity of allowances to be placed in the reserve. This would remain at 200 million allowances, instead of falling to 100 million after 2023.
MEPs believe that maintaining these metrics will provide a strong price signal to reduce GHG emissions by avoiding a harmful increase in the surplus of emission allowances.
They also want the Commission to monitor the functioning of the reserve and keep it operational in case of unforeseen external shocks such as the Covid-19 pandemic. (Original version in French by Damien Genicot)