Surplus of emission allowances on the market continues to fall. It has declined by more than 20% since last year

The surplus of emission allowances on the market, which corresponds to the number of allowances in circulation, fell by more than 300 million year on year. This is according to a European Commission press release published in mid-May. Under the rules of the Market Stability Reserve (MSR), a further 272 million allowances will be withdrawn into the reserve between September 2023 and August 2024.

The European Union decided to establish the Market Stability Reserve in 2015, when emission allowance prices were well below EUR 10/t CO2 and the EU was looking for a way to raise them to a level that would incentivise operators of installations covered by the EU ETS to implement decarbonisation measures.

In recent years, however, emission allowance prices have risen sharply, surpassing EUR 100/t in February. They came close to EUR 100/t again in mid-March and early April, before falling to around EUR 85/t at present. Despite the increase in prices, the rules governing the placement of allowances in the MSR have not yet been amended.