The all-party environment committee in the European Parliament today backed a deal with member states to establish a Market Stability Reserve (MSR), which should be functioning in 2019. This new mechanism will reform the existing EU Emissions Trading Systems (ETS) and will avoid unexpected price fluctuations which may endanger the whole ETS system.
Socialists and Democrats successfully pushed for an early start date for the reserve which will be established in 2019, instead of in 2021 as originally proposed by the European Commission.
S&D spokesperson on climate and environment, Matthias Groote, said:
"The ETS is a very innovative instrument and we need to fix it to make it efficient. The Market Stability Reserve will bring the stability and predictability so urgently needed.
"The decision adopted today creates the right framework for companies to invest long-term, which will allow for sustainable economic growth and job creation.
"More important than the starting date is the reallocation of the unallocated and back-loaded allowances, that will now be put into the reserve. Thus, there will be no unnecessary surplus of allowances on the market.
"The ETS is one of the main pillars of EU climate policy and it was fundamental to send a clear signal to the world ahead of the important UN climate talks in December."
The new system will make the ETS more flexible: Allowances will automatically be transferred to the reserve in times of oversupply and released from the reserve in times of undersupply according to set rules.
