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Adopted text 2026-09-15

Market stability reserve for the EU Emissions Trading System (EU ETS): ceasing the invalidation of allowances

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Parliament's amended version of a proposed decision amending Decision (EU) 2015/1814 on the market stability reserve of the EU Emissions Trading System. It changes the threshold above which allowances held in the reserve are invalidated, and sets dates for when the new threshold applies. Under the amended rules, allowances held in the reserve above 400 million cease to be valid from 2023 until 31 January 2027. From 1 February 2027, allowances held in the reserve above 650 million cease to be valid. The amendments also update the recitals to refer to the Paris Agreement, the first global stocktake and the United Arab Emirates Consensus, and to the historical oversupply in the EU ETS.

Key points

  1. The amended recitals state that the Paris Agreement entered into force in November 2016 and that parties agreed to hold the global average temperature increase to well below 2 °C and pursue efforts to limit it to 1,5 °C.
  2. The recitals add that the first global stocktake outcome was adopted on 13 December 2023 in Dubai, where parties resolved to accelerate efforts to limit the temperature increase to 1,5 °C and adopted the United Arab Emirates Consensus.
  3. The recitals state that the market stability reserve was established to address the historical oversupply in the EU ETS and the risk of supply and demand imbalances, improving the market's resilience to shocks.
  4. The recitals say the aim is to ensure the orderly functioning of the carbon market and the reserve, increase long-term market predictability, and align allowances with the Union's 2040 and 2050 climate targets.
  5. The recitals state that allowances held in the reserve above 650 million should be considered invalid as of 1 March 2027.
  6. The amendment deletes the provision that would have added a paragraph to Article 5 of Decision (EU) 2015/1814 and the provision that Article 1(5a) would cease to apply from the date of entry into force of the act.
  7. A new Article 1a replaces Article 1(5a): unless otherwise decided in the first review under Article 3, from 2023 until 31 January 2027 allowances held in the reserve above 400 million are no longer valid.
  8. From 1 February 2027, allowances held in the reserve above 650 million are no longer valid.
  9. The citation is amended so that the Committee of the Regions is consulted rather than its opinion being had regard to.

Who is affected

  • Participants in the EU Emissions Trading System, for whom the threshold above which reserve allowances are invalidated changes.
  • The market stability reserve, whose invalidation rules and thresholds are amended.

Figures and deadlines

  • 400 million allowances — threshold above which reserve allowances are no longer valid from 2023 until 31 January 2027.
  • 650 million allowances — threshold above which reserve allowances are no longer valid from 1 February 2027.
  • 1 March 2027 — date from which allowances above 650 million should be considered invalid.
  • 31 January 2027 — end of the period in which the 400 million threshold applies.
  • 1 February 2027 — start of the period in which the 650 million threshold applies.
  • November 2016 — entry into force of the Paris Agreement.
  • 13 December 2023 — adoption of the first global stocktake outcome in Dubai.

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