HomeCarbon MarketsEU Proposes Carbon Market Reform to Limit Price Spikes

EU Proposes Carbon Market Reform to Limit Price Spikes

Policymakers in the European Union are looking at carbon market reforms. The goal is to make it easier for policymakers to interfere in the system if prices climb too quickly.

The EU emissions trading system (ETS) comprises a dwindling number of carbon permits that emitters must purchase to offset their emissions.

In the last year, the carbon prices increased by almost 150%, recently reaching record highs of 98.49 Euros per tonne of CO2.

The proposed amendment’s goal is to make it easier to issue additional carbon purchase licenses during periods of rapid price increases.

The rationale for the modification according to German lawmaker Peter Liese is that “high carbon prices have led to concerns regarding excessive price increases and market volatility. Any intervention, however, should avoid price shocks or sudden volatility”

The current regulations of the EU ETS allow nations to add more permits under certain circumstances.  If the carbon price is 3x the average price in the 2 prior years for at least 6 months, they can add more permits.

Some policymakers are arguing that this does not reflect market realities. Their plan is to release an additional 100 million carbon permits from its “market stability reserve” if the carbon price is 2x the average price in the 2 prior years for at least 6 months.

The market stability reserve is a pool of surplus permits that have been pulled from the market to help provide stability.

Before Parliament and EU governments draft the final law, EU parliamentarians will discuss and vote on their final position in June.

Most Popular
LATEST CARBON NEWS

2024 is The Golden Era For Europe’s Renewable Energy: Here’s Why

In 2024, Europe's market for renewable power purchase agreements (PPAs) is poised for substantial growth. Moreover, major mergers and acquisitions (M&A) also happened in...

Audi and Alfa Romeo Take The Ride to Electrification

Amid the rapid adoption of electrification, electric cars are reshaping the automotive industry, promising enhanced performance, efficiency, and a cleaner future. This momentum is...

Is the EV Market’s Momentum Slowing?

Bloomberg Outlook 2024 According to the Bloomberg EV Outlook Report, the global electric vehicle (EV) market in 2024 shows varied progress across different regions and...

Microsoft Strikes 2 Record-Breaking Carbon Credit Deals

Microsoft has entered into a groundbreaking agreement with BTG Pactual Timberland Investment Group (TIG), committing to provide 8 million carbon removal credits, marking the...
CARBON INVESTOR EDUCATION

What Is COP28? Key Issues to Watch Out at 2023 Climate Summit

After a record-breaking year of devastating effects of climate change, from record wildfires in Greece and Canada to floods in Libya, the United Nations...

Climate Disclosure: New Corporate Standards for a Net Zero World

As part of the world’s continued efforts to combat climate change and transition towards net zero, one important piece of the puzzle is new...

Carbon Pricing: Understanding The Economics and Trends of Fighting Climate Change

As global temperatures continue to rise, the urgency surrounding climate policies has intensified, thrusting carbon pricing into the limelight of climate discussions. The race to...

The EU Corporate Sustainability Reporting Directive (CSRD): Key Things to Know

Companies operating in the European Union will have to deal with new non-financial and sustainability reporting requirements starting January 2024 with the EU's Corporate...