European Parliament approves EU ETS change
The European Parliament has endorsed plans to introduce a Market Stability Reserve (MSR) into the EU Emissions Trading Scheme (EU ETS). The MSR, which would begin operating in 2019, is intended to reduce the surplus of carbon allowances available for trading in order to boost the carbon price. It would automatically take a portion of allowances off the market and place them in a reserve if the surplus exceeded a certain threshold, and in the opposite scenario would return allowances to the market. The surplus of allowances within the EU ETS is currently estimated at over 2bn. The legislation will still need to be approved by the council of ministers in September.