Background Paper - The EU ETS Market Stability Reserve: Coping with COVID-19 and preparing for the review

Date: 16 June 2020

Author(s): Andrei Marcu, Jean-Yves Caneill and Domien Vangenechten

This background note, the authors reflect on some of the recent developments and raise five issues for discussion with regard to the upcoming review of the Market Stability Reserve, and its role in the EU ETS.

These issues should not be seen as ‘truths’ in any way, but simply served as ‘food for thought’ for the June 16 meeting organised by ERCST.

The 5 issues are:

  1. Analyzing the track-record of the MSR - understanding the role of the MSR in dealing with the impacts of COVID-19
  2. ‘Future-proofing’ the MSR when emission pathways are uncertain
  3. We are now looking at the whole ETS framework – is the MSR still the critical element?
  4. Implications of an explicit 2050 climate-neutrality goal for the EU ETS?
  5. Evolution towards revenue maximization?