Climate Action

ETS Market Stability Reserve to reduce auction volume by over 330 million allowances between September 2020 and August 2021

08/05/2020

The European Commission published today the total number of allowances in circulation on the European carbon market. It amounts to 1 385 496 166 allowances.

The total number of allowances in circulation plays an important role for the operation of the Market Stability Reserve (MSR) of the EU Emissions Trading System (ETS), which began operating in January 2019. This indicator shows the amount of allowances in circulation by the end of each year, in a transparent and predictable manner.

As long as the indicator exceeds the threshold set in the legislation of 833 million allowances, a certain share of the total number of allowances in circulation is placed in the reserve each year. For the years 2019 to 2023, this share is set at 24% of the total number of allowances in circulation. Allowances are placed in the reserve by decreasing the amount of allowances that Member States auction.

900 million allowances that were backloaded in 2014-2016 were added to the Market Stability Reserve. The calculation of the total number of allowances in circulation in 2019 is based on an extract of verified emissions data from the EUTL made on 1 April 2020, which was also published today. Moreover, the calculation for 2019 is based on emissions and issuance in 2019; it does not include UK volumes of emission allowances of free allocation or auctioning for 2019, since they are only being released in 2020.

Based on the indicator published today and on the provisions of the legislation, auction volumes from September 2020 to August 2021 will be reduced by 332 519 080 allowances.

The next time the total number of allowances in circulation will be published is by 15 May 2021.

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