ETS / MSR : Council agrees on targeted amendment on the suspension of the allowances invalidation system

The member states of the European Union have agreed on their position towards the Commission's proposal on amending the Market Stability Reserve (MSR) of the EU ETS, ahead of negotiations with the Parliament, on 23 September 2026 in Brussels.

While the Commission proposed to undefinitely suspend the invalidation mechanism of allowances above the 400 M threshold of the Market Stability Reserve -resulting in an undefinite pause of the whole ETS trajectory towards net zero, the Council agreed to pause the invalidation mechanism until 31 December 2030.

This means that, until then, allowances held above the current invalidation threshold of 400 million will not be cancelled and will remain in the system. The larger number of allowances will enhance the long-term stability of the EU carbon market and will provide a larger buffer for future market fluctuations.

According to the Council’s position, from 1 January 2031, a higher invalidation threshold of 800 million allowances will be introduced, doubling the existing clause and ensuring liquidity in a tighter market. The annual decrease of…