ETS2 Market Stability reserve: a provisional agreement reached between the Council and Parliament

The Cyprus presidency of the Council and European Parliament representatives have reached a provisional agreement on the targeted amendment to the market stability reserve (MSR) for the EU’s emissions trading system for the buildings, road transport and additional sectors (ETS2), announced the co-legislators on 11/06/2026.

The MSR addresses supply and demand imbalances in ETS2, by adjusting the number of emission allowances available in circulation. The agreement will strengthen it and "further ensure a stable and predictable market for allowances ahead of the full launch of ETS2 in 2028".

With this agreement, co-legislators confirmed the core elements of the Commission proposal (adopted on 27/11/2025), which provided for :
• the extension of the stability reserve beyond 2030, to help maintain price stability over time;
• the reinforcement of the existing price control mechanism, "by doubling from 20 million to 40 million the number of allowances to be released when the cost of carbon exceeds €45 per tonne CO2 equivalent (in 2020 prices)".

In addition to adopting the key elements of the…