The EU Council and Parliament have reached a provisional agreement on amendment to the market stability reserve for the new emissions trading system for the buildings, road transport and additional sectors.
The agreement strengthens the Market Stability Reserve (MSR) for the new emissions trading system covering buildings, road transport and additional sectors (ETS2), helping to ensure a smooth and predictable start when the system launches in 2028.
The agreement strengthens ETS2 safeguards by enabling stronger intervention to support market price stability and reinforcing the reserve’s capacity to operate in the longer term, while preserving the environmental integrity of the system.
By strengthening the Market Stability Reserve for ETS2, the agreement signals that the EU is committed to a predictable and reliable carbon market, providing greater certainty for citizens, businesses and those investing in the transition. The measures are expected to contribute to a fair and orderly transition towards climate neutrality:
Firstly, to reinforce longer-term market predictability and confidence, the capacity of the reserve to operate beyond 2030 is strengthened through the extension of the validity of ETS2 allowances held in the reserve beyond 2030, for future release if needed.
Secondly, the agreement enables stronger intervention for price stability by doubling the number of allowances to be injected if the ETS2 price rises above a certain level.
Thirdly, the agreement provides for earlier and more gradual releases of allowances from the reserve onto the market, as an additional safeguard for market stability.
Early ETS2 auctions will start in 2027, making revenues available sooner for investments and delivering a transparent price signal. In addition, the Commission and the European Investment Bank established a new ETS2 Frontloading Facility for Member States , making up to €3 billion available to Member States over 2026-2027.
