ETS2 stabiliser may release 40 million allowances

On 9 October, the Council of the European Union formally adopted changes to the market stability reserve for ETS2, the emissions system covering buildings, road transport and additional sectors. If the carbon price exceeds €45 per tonne in 2020 prices, the amount that may be released will double from 20 million to 40 million allowances.

The measure keeps the reserve in operation beyond 2030 and creates a more gradual release when allowances in circulation fall below 260 million. ETS2 starts in 2028. Fuel distributors, rather than households, are directly liable, but allowance costs may feed through to transport and heating bills.

For Hungary, the actual pass-through, domestic tax and compensation rules, and energy-efficiency support will determine the consumer impact. The €45 trigger is expressed in 2020 prices, so it is not a simple nominal cap. Related reading includes the Eurogroup agenda on energy and savings and our report on the EU renewable electricity share.

The reserve is designed to adjust supply automatically, not to abandon the emissions target. The decision must still be signed and published in the Official Journal of the EU. It will enter into force on the twentieth day after publication.