EU launches Consultation on EU ETS and Market Stability Reserve

The European Commission has opened a wide-reaching public consultation on the EU Emissions Trading System (EU ETS) and its Market Stability Reserve (MSR), seeking input ahead of planned reviews in 2026.

The consultation, now live on the EU’s “Have Your Say” portal until July 8, 2025, invites stakeholders to weigh in on how these core climate policies are performing and how they might be improved. It forms part of the EU’s broader effort to refine its climate tools as it pushes toward climate neutrality by 2050.

Following the “evaluate first” principle — where existing initiatives are rigorously assessed before any reforms are proposed — the Commission is aiming for a transparent, evidence-based approach to policymaking.

The EU ETS remains a cornerstone of Europe’s climate strategy, using carbon pricing to drive down emissions across industries such as energy production, heavy manufacturing, aviation, and, more recently, maritime transport.

The system was significantly revised in 2023 under the “Fit for 55” legislative package, expanding its scope and tightening its emissions reduction targets to help meet the bloc’s 2030 and 2050 climate goals.

This latest consultation focuses on how the revised ETS Directive is working in practice, particularly after major updates made under Directive (EU) 2018/410, which aimed to make the system more robust against volatile carbon prices and shifting economic conditions.

Alongside the ETS, the Commission is also scrutinizing the performance of the MSR—a mechanism introduced in 2019 to stabilize the carbon market by adjusting the supply of allowances based on market dynamics. 

The consultation seeks views on whether the MSR is effectively maintaining market balance and if refinements are needed.

The review will pay particular attention to how the ETS applies to sectors like aviation, maritime transport, and stationary installations. 

Ensuring these industries fairly and effectively contribute to Europe’s climate targets is a key goal, especially as the EU pushes for net-zero emissions by mid-century.

source: carbon herald