ETS2 MSR: Phased cancellation emerges as the core ENVI compromise

A compromise has reportedly been reached among the centre‑coalition parties in the European Parliament’s environment committee (ENVI) on the amendments to the draft report on the ETS2 Market Stability Reserve (MSR) reform. The outcome is in line with what we anticipated last week – a modest tightening relative to the Commission’s proposal centred on a phased cancellation, which, in our view, will have only a marginal price impact. The more consequential battle over the ETS2’s long‑term design is likely to play out in the upcoming ETS Directive review that will start in earnest in July.