ENVI Committee: MEPs vote to retain ETS market stability reserve's invalidation mechanism

The European Parliament's ENVI Committee rejected the Commission's plan to scrap the invalidation mechanism within the EU Emissions Trading System's market stability reserve (MSR), on 10 September 2026. Instead, MEPs voted (43-21, with 6 abstentions) to keep the mechanism but raise its threshold significantly.

Currently, any allowances stored in the reserve beyond 400 million are cancelled. The Commission proposed to eliminate this cap entirely, letting unlimited allowances accumulate as a stabilising buffer. MEPs disagreed, proposing instead to raise the ceiling to 650 million allowances starting 1 March 2027.

The committee argues this approach better balances several goals: ensuring that the European carbon market and the MSR function properly, improving long-term market predictability…