The European Commission published today the total number of allowances in circulation on the European carbon market. It amounts to 1 578 772 426 allowances. At the same time last year the amount was 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 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 MSR 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 MSR by decreasing the amount of allowances that Member States auction.
Based on the indicator published today and on the provisions of the legislation (Decision 2015/1814, the MSR Decision), auction volumes from September 2021 to August 2022 will be reduced by 378 905 382 allowances, which will be placed in the MSR.
This year the total quantity of allowances in the MSR will include allowances linked to phase 3 (2013-2020) not allocated to installations pursuant to Article 10a(7), and allowances not allocated to installations because of the application of Article 10a(19) and (20) of Directive 2003/87/EC (the ETS Directive). These unallocated allowances are to be placed in the MSR as per Article 1(3) of the MSR Decision. The final numbers for the unallocated allowances because of the application of Article 10a(19) and (20) of the ETS Directive are not available at the time of this publication. It should be noted that these unallocated allowances do not have an impact on the total number of allowances in circulation and will therefore not affect the amount of allowances to be auctioned.
The European Commission will update today’s publication, as soon as the number of allowances related to ETS Directive Articles 10a(19) and (20) becomes available, in order to accurately show the total quantity of allowances in the MSR.
After that, the next time the total number of allowances in circulation will be published is by 15 May 2022.