EU Commission proposes to stop the automatic invalidation of EU Emissions Trading System (ETS) allowances held in the Market Stability Reserve (MSR) that exceed 400 million units. Instead of being cancelled, these allowances would be retained in the reserve. The change is intended to strengthen the MSR’s role as a buffer, improving its ability to respond to future market developments such as supply tightness or excessive price volatility, while preserving the system’s rules‑based design. The Commission says the proposal does not have an immediate impact on market balance; allowances would only be released into the market when conditions warrant. A comprehensive review of the EU ETS will take place in July 2026 to assess and adjust the MSR as needed. The measure is part of an effort to keep the ETS fit for purpose, supporting decarbonisation, competitiveness and energy security.
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