The European Commission has proposed changes to the Market Stability Reserve to reinforce the stability and predictability of the EU Emissions Trading System.
The Commission said the amendment would stop the invalidation of allowances above 400 million, allowing them to be retained as a buffer to support market stability.
It added that the Market Stability Reserve will continue to adjust supply by removing allowances when there is a surplus and injecting them during scarcity.
The EU Emissions Trading System has reduced domestic emissions by 39% while the economy grew by 71% between 1990 and 2024.
The Market Stability Reserve has been operational since 2019 and had invalidated 3.2 billion allowances by the end of 2024.
The proposal will now be submitted to the European Parliament and the Council under the ordinary legislative procedure.
“By strengthening the Market Stability Reserve, we enhance EU ETS’ resilience to volatility and ensure that it continues to drive decarbonisation, support competitiveness and foster clean investment,” said Wopke Hoekstra, commissioner for climate, net zero and clean growth.