EU agrees to keep larger carbon permit reserve to curb price spikes
EU member states have decided to retain more surplus allowances in the Emissions Trading System’s reserve, aiming to shield the market from sharp price surges.
EU diplomats confirmed that member states will alter the handling of surplus carbon allowances, opting to keep a larger share in the Market Stability Reserve instead of cancelling them at the 400-million-permit limit. The change is part of a broader response to higher energy prices linked to the Iran conflict and seeks to prevent sudden spikes in carbon prices that could strain industry. Commission data show the average price in September was €75.99, far under the €170.73 level required to activate the existing excessive-price safeguard.
Peter Liese, the European Parliament’s lead negotiator, said the reform can ease pressure on businesses while preserving emissions targets, proposing that 75% of ETS revenues support domestic industry. The agreement sets the negotiating stance for EU governments, with the European Parliament still formulating its own position before final legislation is drafted.
Why it matters
Keeping more carbon permits available helps stabilise EU carbon prices, protecting both industry costs and climate objectives.
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