European Commission secures stronger MSR safeguards for ETS2 (buildings & road transport)
- European Parliament and Council reached a provisional agreement to reinforce the Market Stability Reserve for ETS2 covering buildings and road transport.
- The reserve’s validity is extended beyond 2030 so allowances held can be released later if needed.
- The number of allowances injected when the ETS2 price rises will be doubled to support market price stability.
- Early ETS2 auctions will start in 2027 and an ETS2 Frontloading Facility will make up to €3 billion available to Member States over 2026–2027.
Overview
The European Parliament and Council reached a provisional agreement to strengthen safeguards for the new emissions trading system covering buildings, road transport and additional sectors (ETS2). The changes aim to improve market stability and ensure a predictable start when ETS2 becomes fully operational by 2028.
Market Stability Reserve changes
The agreement extends the validity of ETS2 allowances held in the Market Stability Reserve beyond 2030 so they can be released later if needed. It also doubles the number of allowances to be injected when prices exceed a set level and provides for earlier and more gradual releases from the reserve as an additional market-stability safeguard.
Timing and financing
Early ETS2 auctions will begin in 2027 to make revenues available sooner and provide an early price signal. The Commission and the European Investment Bank re-established an ETS2 Frontloading Facility to make up to €3 billion available to Member States over 2026–2027. The Commission originally tabled the targeted MSR amendment on 27 November 2025.
Next steps
The provisional agreement must be formally adopted by the European Parliament and the Council, after which the MSR amendment will be published in the Official Journal of the EU and enter into force. The measures are intended to complement the Social Climate Fund to support a fair transition.
Source: European Commission
