Commission welcomes political agreement on rules enhancing stability and long-term resilience of EU carbon market
The European Commission welcomes the provisional political agreement reached by the European Parliament and the Council on a targeted amendment to strengthen the Market Stability Reserve (MSR) of the EU’s Emissions Trading System (EU ETS).
Following the Commission’s proposal in April 2026 and delivering on the European Council conclusions last week on 16 October, this swift agreement will help to ensure a stable, well-functioning carbon market in the EU and enhance EU ETS’ resilience to excessive price volatility.
Commissioner for Climate, Net-Zero and Clean Growth, Wopke Hoekstra, said: “This agreement is an important deliverable in making the ETS fit for the future and a strong response to the calls of EU leaders last week. It will strengthen market stability and predictability over the next decade, enhance EU industry and competitiveness, and give businesses greater certainty to invest. It will also support industrial decarbonisation by reinforcing the resilience of the EU ETS against future shocks and excessive price volatility.”
Under the current system, all emission allowances in the reserve above 400 million are invalidated. Thanks to the agreement, the reserve will be able to retain up to 700 million allowances as a buffer to support future market stability and predictability. It is a first step towards a wider modernisation of the Market Stability Reserve, for which further reforms have been proposed by the Commission as part of the separate MSR reform and the EU ETS review on 17 July 2026.
A press release on the MSR agreement is available online.
