On 18 September 2015 in a meeting of the Council of the European Union (EU), EU Environment Ministers approved the deal on reforming the European Union Emissions Trading System (EU ETS). This establishes a Market Stability Reserve (MSR) that will come into effect in 2019. More than four fifths of the ministers voted in favour of the MSR (84.2% for and 15.8% against).
This is the final step in the EU legislative process, following a vote by the European Parliament on 8 July 2015 in favor of the MSR, in which 459 voted in favor, 158 were against and 59 abstained.
The informal agreement had been reached on 5 May 2015 during trilogue negotiations with members of the European Parliament, Commission and the Council of the European Union.
The MSR aims to address structural imbalances in the European carbon market, will start operating on 1 January 2019. Over time, it will help address the current surplus of roughly 2 billion allowances. The MSR deal also includes the transfer of 900 million backloaded allowances into the MSR, as well as unallocated allowances either set aside for new entrants or stemming from plant closures. The adoption of the MSR clears the way for further discussion on EU ETS post-2020 structural reform, a proposal for which the Commission put forward on 15 July. Ian Duncan of the European Conservatives and Reformists Group has been tasked with steering the proposal through the European Parliament.
