EU Parliaments Adopts Reform on European Emission Trading Scheme

On 8 July 2015 the European Parliament agreed to the reform of the ETS, including the introduction of the Market Stability Reserve (MSR).

As previously reported the reform was informally agreed with the Latvian Presidency of the Council on 7 May. Two month later this informal deal was discussed by Members of the European Parliament on 7 July, before the European Parliament approved the reform on the following day by 497 votes to 158, with 49 abstentions.

The reform is intended to reduce the number of carbon credits available for trading to support the price of the emission rights. MSR intends to prevent unnecessary and low priced allowances being available on the market and provide more flexibility. The reform aims to reduce the current “oversupply” of 2,1 billion allowances that the EU ETS has accumulated in the past few years. The aim is to reduce allowances by 1,5 billion in 2019. This still has to be finally approved by EU ministers in September. The new rules shall then come into effect on the 1 January 2019.

The reform is controversially discussed in Germany. Industry representatives warned of negative consequences. “The reform puts the competitiveness of our European industries under additional pressure,” warned the Federation of German Industries (Bundesverband der Deutschen Industrie, “BDI”). “Global competitors do not have these additional costs.” According to the association of energy intensive industries in Germany (EID) energy intensive companies could face costs of up to five billion euros a year.

Source:, EU Parliament

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