Blog: June 2015

The European Parliament and the European Council reached earlier this month an informal agreement on the establishment and operation of a Market Stability Reserve (MSR). The legislative proposal to establish an MSR in the EU Emission Trading System (EU-ETS) seeks to address the problem of an oversupply of allowances, leading to a low carbon price. The proposal foresees the reserve as a mechanism to prevent extreme fluctuation of carbon price, by reducing or increasing the supply of allowances.