According to the European Commission, the total number of CO2 emission allowances in circulation (TNAC) on the European carbon market stood at nearly 1.135 billion allowances in 2022. As agreed in 2015, when the TNAC exceeds 833 million, 24% of the TNAC is placed in the Market Stability Reserve (MSR), which was created to avoid the EU carbon market operating with a large structural surplus of allowances and falling CO2 prices on the EU ETS; if the TNAC is below 400 million, 100 million allowances are released from the MSR and auctioned. Consequently, 24% of the 1.135 billion allowances (i.e., over 272 million allowances) will be placed in the MSR over a 12-month period, from 1 September 2023 to 31 August 2024.
On 31 December 2022, there were 3 billion allowances in the Market Stability Reserve. On 1 January 2023, 2.5 billion of these allowances became invalid - under a 2015 decision, any allowances held in the MSR above the previous year's auction volume are no longer valid - and the remaining holdings of the Reserve amounted to 486 million allowances, the volume of allowances auctioned in 2022.
The EU Emissions Trading Scheme puts a cap on the CO2 emitted by more than 11,000 EU installations in the power sector and energy-intensive industry through a market-based cap and trade system, covering around 40% of the EU greenhouse gas (GHG) emissions. It will also cover emissions from maritime transport from 2024.
Interested in Global Energy Research?
Enerdata's premium online information service provides up-to-date market reports on 110+ countries. The reports include valuable market data and analysis as well as a daily newsfeed, curated by our energy analysts, on the oil, gas, coal and power markets.
This user-friendly tool gives you the essentials about the domestic markets of your concern, including market structure, organisation, actors, projects and business perspectives.