As the European Union institutions prepare to embark on the final negotiations around the bloc’s diluted 2040 climate target, there is one last chance to shore up some of the goal’s loopholes for the good of the environment and society.
Following the recent announcement both of the proposed delay of introduction of ETS2 and also the proposed reforms to the Market Stability Reserve of the ETS2 concerns are raised by the European Environmental Bureau, Climate Action Network Europe, The Green Tank, Citizens Climate Europe, Ecodes, Fundación Renovelables, Rescoop, Leveo Munkacsoport, Electra Energy, Energiaklub, CDE.
Although the European Union has the means and capacity to wave goodbye to fossil fuels by 2040, EU environment ministers have backed an unambitious climate target for that year that unfairly shifts some of the burden for domestic climate action to the Global South and future generations.
In response to pressure from national governments, the European Commission has proposed changes to the Market Stability Reserve that will regulate the supply of pollution allowances for the new Emissions Trading System for road transport and buildings (ETS2). While a couple of changes are welcome, others risk stifling the system’s climate effectiveness. In recent months …
A letter addressed to Commissioner Hoekstra and Commissioner Jørgensen from the European Environmental Bureau, Climate Action Network Europe and the LIFE Effect consortium – to which Carbon Market Watch is a member – relating to ideas for a reform of the ETS2, in particular the MSR2, as proposed by a recent non-paper signed by 16+ Member States.
This explainer highlights the risks such changes will create in terms of generating higher emissions and the dangers politically of opening up different legislative instruments.
15 September 2025 | 14.00-15:30 CET | Online
A dangerous approach to addressing high ETS2 prices would be to reform the Market Stability Reserve prematurely – before the real price signal and emission levels in the market become clear and without considering the environmental implications of the additional allowances that would enter the market and risk exceeding the ETS2 emissions cap.
NGOs are concerned that measures outlined in NSCPs will be insufficient to protect those most vulnerable to ETS2 prices. National governments must prioritise completing their plans as soon as possible, but not at the expense of meaningful stakeholder engagement.
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