The European Commission asserted that the EU ETS Market Stability Reserve would both address the surplus of emission allowances that has built up and improve the system's resilience to major shocks by automatically adjusting the supply of allowances to be auctioned. 


But the operation of the reserve is based only on the volumes of allowances in circulation, which seems the fundamental shortcoming.






Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (COM(2014)20/2) of January 2014 also puts forward the  EU ETS Directive (2003/87/EC) amendments.


European Commision's document MEMO/14/39 "Questions and answers on the proposed market stability reserve for the EU emissions trading system" of 22 January 2014


See also the European Commission's website for a structural reform of the EU ETS.





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