The Market Stability Reserve mechanism has been a crucial tool to tackle historic market surplus and help bring the European carbon market into a state of balance. It was also a key trigger behind the past year’s carbon price journey. With the fit for 55 review, the mechanism is further strengthened and will continue to be active for the better part of this decade, however entering the buffer operation state already next year. The REPowerEU program, frontloading EUAs to accelerate power sector decarbonization, extends the operation of the MSR and leads to a de facto tightening of the market balance of 195 Mt. As supply-demand balances are restored, the role of the mechanism will fade. With the MSR in a dormant state, the buffer against sudden demand shocks will be gone.
The ‘before-after’-moment of the EU ETS When the Market Stability Reserve (MSR), a mechanism to balance the European carbon market, was adopted by EU legislators in 2015, it was the response to a genuine worry that EUs flagship climate instrument was at r…
A weekly cap of what moved EUA prices and a clear view of the week ahead. We set out the drivers, their directional impact, and what matters next.
Specialising in data, analysis, and insights for all significant low-carbon markets and renewable energy.
