ETS Market Stability Reserve - Change Partnership

The European Commission proposed an automatic mechanism to remove the 2 billion surplus of ETS allowances which destabilised the supply and demand balance causing prices crash and remain ineffective. The Market Stability Reserve (MSR), if designed correctly, could restore short and long-term confidence to the carbon market.

Key elements of the Commission’s proposal and impact assessment are:

A Market Stability Reserve that comes into force in 2021
Institutionalising a surplus of ETS allowances between 400 and 833 million tonnes
When the surplus is more than 833 million 12% excess allowances enter the MSR
When the surplus is less than 400 million, 100 million allowances exit the MSR
The 400 and 833 million thresholds will be reviewed in 2026

Reform in the European Parliament

Key documents:

Ivo Belet leaked report (17 November 2014) Draft ITRE Opinion 17.10.14 5 November hearing agenda MSR hearing slides (Advance copy) ITRE MSR amendments – UNTRANSLATED (28 November 2014) draft ITRE compromise amendments without agreement from other shadows (8 December 2014) UK MSR and competitiveness guidance note (December 2014) ENVI Committee amendments – untranslated (Dec 2014) ENVI Committee amendments – translated (January 2015) ITRE Compromise amendments (14 January 2015) EPP internal compromise between Tajani and Belet EPP internal compromise between Tajani and Belet Provisional draft of ENVI compromise amendments (12 February, 2015) ENVI Compromise amendments (23 February 2015) ENVI final compromise amendments (24 February 2015) ENVI Committee roll call vote ( 24 February, 2015) ENVI final negotiating amendments (2 March 2015)

The European Parliament’s Environment, Public Health and Food Safety Committee (ENVI) and the Environment Council are is responsible for improving the Commission’s proposal. The ENVI Committee appointed:

Ivo Belet MEP (EPP) Belgium – lead legislator (Rapporter)

Mathias Groote MEP (S&D) Germany – Shadow

Bas Eickhout MEP (Greens/EFA), Netherlands – Shadow

Gerban-Jan Gerbrandy MEP (ALDE) Netherlands – Shadow

Merja Kyollnen MEP (GUE/NL) Finland – Shadow

Ian Duncan MEP (ECR) United Kingdom – Shadow

Eleonora Evi MEP (EFDD) Italy

Industry, Energy and Research Committee (ITRE) gives an opinion to the ENVI Committee. The opinion givers are:

Antonio Tajani MEP (EPP) Italy

Fedrick Federley MEP (ALDE) Sweden

Theresa Griffin MEP (S&D) UK

Peter Eriksson MEP (Greens/EFA) Sweden

Cornelia Ernst MEP (GUE/NL) Germany

Rolandas Paksas MEP (EFDD) Lithuania

Marek Grobarczyk MEP (ECR) Poland

Reform in the Environment Council

The following countries have submitted official positions outlining their key reform priorities:

Germany UK (October 2014) French government’s non-paper (October 2014) Council progress report (5 December 2014) Latvian Presidency proposal (7 January 2015) Joint Ministerial statement on MSR (23 February 2015) Latvian Presidency MSR text (12 February 2015) Council text with EP amendments (5 March, 2015) Latvian Presidency (12 March 2015) Latvian Presidency (20 March, 2015) 1st trilogue text (26 March, 2015) Council Working Party text (15 April, 2015) 2nd trilogue text (30 April, 2015) Final MSR text adopted after trilogue (5 May, 2015)

Timetable

5 November, 2014 – Joint ENVI and ITRE hearing. Room JAN 4Q2, Brussels.

10-13 November, 2014 – Debate in the ENVI Committee. Room JAN 4Q2, Brussels.

17 November, 2014 – Consideration of ITRE Committee opinion. Room JAN 4Q2, Brussels and Council Working Party meeting.

24 November, 2014 – Deadline for amendments to the ITRE opinion.

3 December, 2014 – Consideration of Belet’s draft MSR report in ENVI. Room JAN 4Q2, Brussels, and ITRE opinion.

11 December, 2014 – 12pm deadline for amendments to Belets report.

17 December, 2014 – Environment Council. Expected to agree position on MSR reform.

21 January, 2015 – ITRE vote on Opinion. Consideration of amendments in the ENVI committee.

24 February, 2015 – ENVI Committee vote on MSR report.

10 March, 2015 – Council Working Party.

16 March, 2015 – Council Working Party.

25 March, 2015 – Coreper takes Council position.

30 March, 2015 – First negotiation between Council, Parliament and the Commission.

1 April, 2015 – Coreper discusses outcome from first trilog negotiation.

20 April, 2015 – Council working party ‘Tecnical meeting’.

29 April, 2015 – Coreper meeting to agree position prior to second trilog negotiation between Council, Parliament and the Commission.

5 May, 2015 – Second negotiation between Council, Parliament and the Commission.

26 May, 2015 – Possible third negotiation between Council, Parliament and the Commission.

Plenary vote in the Parliament, which approves the negotiated compromise, to take place between 27 May – 31 July 2015.

Literature

Analysis:

Point Carbon MSR insight (27 April, 2015)

Point Carbon Insight (27 February, 2015)

Climate Strategies (16 February 2015)

Tschach Solutions (February 2015)

Fortum (December 2014)

Point Carbon (June 2014)

Point Carbon analysis of Ivo Belet’s report (November 2014)