The Council of the European Union (EU) and the European Parliament today reached a provisional agreement on the tool to stabilize the market for emission allowances for road transport and buildings.
According to a statement released today, the Cypriot Presidency of the Council and representatives of the European Parliament reached a provisional agreement on “the targeted amendment of the Market Stability Reserve for the EU Emissions Trading System with regard to the buildings sector, road transport, and other additional sectors (CELE2).”
The market stability reserve aims to correct imbalances between supply and demand in CELE2, adjusting the number of emission allowances available in circulation.
The co-legislators agreed on the need to bolster market predictability, reduce volatility and provide a stronger response to excessive price increases.
The agreement extends the operation of the market stability reserve beyond 2030, which will help to maintain price stability over time.
To strengthen market confidence, the provisional agreement consolidates the existing price-control mechanism, doubling from 20 million to 40 million the number of emission allowances to be released when the carbon price exceeds 45 euros per tonne of CO2 equivalent (at 2020 prices).
Moreover, the agreement will ensure a more gradual and reactive release of emission allowances whenever the number in circulation falls below 260 million.
The Council and the EP will now formally approve the agreement, with CELE2 entering into force in 2028.
