The European Carbon Market 06.05.2015

Carbon Expert welcomes the provisional agreement reached yesterday, 6 May 2015 by the European Parliament and the Council on the proposal to establish a Market Stability Reserve (MSR) under the EU Emissions Trading System (ETS).

A robust MSR which enters into operation early in 2019 ensures that the 900 million backloaded allowances as well as the unallocated allowances are transferred to the reserve.

The agreement on MSR effectively consists of the following outcomes:

  • Start date: January 2019
  • Backloaded allowances: 900 million allowances postponed from auction 2014-2016 to 2019-2020 will be placed in the MSR
  • Unallocated allowances: to be placed in MSR in 2020; future usage will be considered under broader ETS review
  • EU ETS and MSR review: to take into account carbon leakage and competitiveness aspects, as well employment and GDP related issues.

Adjustments to the long-term price outlook are already taking place and according to the team at Point Carbon, prices of EUAs of €12 in the coming year could rise by the end of that period up to €19. The analysts expect a price increase of up to €31 per certificate for the period until 2030.

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