Council adopts decision on market stability reserve

The Council adopted a separate decision amending the market stability reserve.

The market stability reserve aims to address the surplus of emission allowances that has built up in the EU emission trading system (EU ETS) since 2009 and to improve the system's resilience to major shocks by adjusting the supply of allowances to be auctioned.

The decision on the market stability reserve has been revised in the  ‘Fit for 55’ package that aims to enable the EU to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.

The change to the market stability prolongs beyond 2023 the increased annual intake rate of allowances (24%). In addition, further changes to the market stability reserve will be adopted as part of the revision of the EU ETS expected to be adopted shortly.

Background and next steps

The revision of the market stability reserve decision is part of the ‘Fit for 55’ package. Presented by the European Commission on 14 July 2021, the package will enable the EU to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.

The European Parliament adopted a series of amendments to the Commission proposal on 5 April 2022. The Environment Council reached a general approach on the proposal on 29 June 2022.

After interinstitutional negotiations, the Council and the European Parliament reached a provisional political agreement on the proposal on 18 December 2022.

The Council adoption today is the last step of the decision-making procedure. The decision will now be published in the EU’s Official Journal and enter into force.