During the night from Wednesday to Thursday, 11 June, the Council of the EU and the European Parliament reached a provisional agreement on the ETS2 market stability reserve.
This proposal for an amendment—presented by the European Commission on 27 November 2025 (see EUROPE 13761/2)—concerns the market stability reserve (MSR) for ETS2, the EU’s expanded emissions trading system that includes road transport and buildings. The system will not be in place until 2028, following a one-year postponement as part of an agreement on the 2040 climate target. As it is, the early launch of ETS2 auctions will generate revenue as soon as 2027 (see EUROPE 13882/27).
The provisional agreement takes up the key elements of the European Commission’s proposal and makes a certain number of additions to it. First, it extends the market stability reserve beyond 2030. Next, it doubles the number of allowances to be released (from 20 million to 40 million) when the cost of carbon exceeds €45 per tonne of CO2 equivalent (at 2020 prices). The agreement also provides for “a more gradual and responsive release of allowances when the number in circulation falls below 260 million”.
There is already concern regarding the use of ETS2 revenues. Finally, a reference has been added to emphasise the need to use ETS2 auction revenues to invest in climate and energy transition measures in the sectors covered by the system—a recurring issue in ETS1 (see EUROPE 13879/11).
Before entering into force, the provisional agreement still has to be formally adopted by the Council of the EU and by the European Parliament. (Original version in French by Nadège Delépine)