EUROPEAN COMMISSION

Brussels, 27.11.2025

COM(2025) 738 final

2025/0380(COD)

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Decision (EU) 2015/1814 as regards the market stability reserve for the buildings, road transport and additional sectors

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

•Choice of the instrument

3.RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Ex post evaluations/fitness checks of existing legislation

The proposal takes into account the experience gained from implementing the EU ETS Directive for the emissions trading system for road transport, buildings and additional sectors since its entry into force in June 2023. The impact assessment for the 2021 review of the EU ETS and MSR highlights that the ETS2 allowance price will depend on the implementation of complementary policies and measures supporting the decarbonisation of these sectors. The Commission’s assessment in 2025 of National Energy and Climate Plans shows significant progress on Member States’ complementary policies and measures towards the 2030 energy and climate targets. It also identifies remaining gaps in the road transport and building sectors which need to be addressed to close in on these targets.

•Stakeholder consultations

•Collection and use of expertise

•Impact assessment

•Fundamental rights

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

•Detailed explanation of the specific provisions of the proposal

·To improve long-term liquidity and predictability in the market, Article 1(1) deletes the second sentence concerning the invalidation of allowances that have not been released from the reserve by 31 December 2030. Currently, the initial 600 million allowances held in the Market Stability Reserve (MSR) are only valid until 31 December 2030, after which any allowance that has not been released from the reserve will no longer be valid. Removing this clause helps increase market predictability and confidence among financial actors and market participants, thereby promoting price stability over time.

·Article 1(3) modifies the injection rate mechanism to provide a more gradual and responsive release of allowances from the reserve into the market. It proposes an MSR injection when the total number of allowances in circulation (TNAC) is between 210 million and 260 million. In such a case, the injection will be 100 million allowances minus twice the difference between the TNAC and the 210 million threshold. The proposal addresses the ‘threshold effect’ that would take place when the TNAC is very close to the lower threshold, which determines the injection of allowances from the MSR into the market. In that case, one allowance more or fewer in the TNAC may trigger an injection, depending on whether the TNAC is above or below the threshold. Uncertainty about whether this will happen risks creating price volatility on the market. This amendment helps preventing sudden and sharp supply fluctuations in the market and reducing price volatility, thereby contributing to both enhanced market stability and a stable price signal in the market for ETS2 emission allowances.

·Article 1(4) adds a top-up mechanism of 20 million allowances to the number of allowances to be injected under the excessive price control mechanism in Article 30h(2) of Directive 2003/87/EC. The objective is to further improve the reactivity of this mechanism to unwarranted price fluctuations and enhance market predictability. Directive 2003/87/EC provides a mechanism to ensure price stability in the early years of the ETS2 by releasing 20 million allowances from the MSR if the carbon price exceeds the level of EUR 45 per tonne. In accordance with Article 30h(7), this measure can be applied twice within a period of 12 months. This amendment carefully strengthens this mechanism by making it possible to release a higher number of allowances in the market to further improve market confidence, which is important for planning decarbonisation investments.

2025/0380 (COD)

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Decision (EU) 2015/1814 as regards the market stability reserve for the buildings, road transport and additional sectors

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 192(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee 3 ,

Having regard to the opinion of the Committee of the Regions 4 ,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1)The Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in November 2016 (‘the Paris Agreement’). The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels.

(2)Decision (EU) 2015/1814 of the European Parliament and of the Council 5 established a market stability reserve in order to mitigate the risk of supply and demand imbalances associated with the start of emissions trading for the buildings, road transport and additional sectors, as well as to make it more resistant to market shocks.

(3)The analysis carried out of the expected functioning of the reserve, taking into account recent information, indicates that targeted amendments to some parameters would contribute to improving market predictability and to the stability of price movements in the early years of the new system.

(4)In order to increase long-term market predictability, the allowances placed in the reserve for the buildings, road transport and additional sectors that have not been released should remain valid beyond 31 December 2030.

(5)In the event that the total number of allowances in circulation reaches a level below 260 million allowances, a more gradual and responsive release of allowances would contribute to further improving market stability and predictability for market participants. Therefore, the injection mechanism should take into account the difference between the total number of allowances in circulation and the lower threshold.

(6)In order to further improve its reactivity to unwarranted price fluctuations and increase market predictability, the mechanism to enhance price stability in the first three years of the emissions trading system for buildings, road transport and additional sectors should be strengthened in a careful manner. This could involve releasing a higher volume of allowances in the market. If the measure is applied twice during the same 12 months period, the additional release should occur twice.

(7)Decision (EU) 2015/1814 should therefore be amended accordingly,

HAVE ADOPTED THIS DECISION:

Article 1

Article 1a of Decision (EU) 2015/1814 is amended as follows:

(1)In paragraph 3, the second sentence is deleted;

(2)In paragraph 4, the second sentence is replaced by the following: ‘The total number of allowances in circulation under this Article in a given year shall be the cumulative number of allowances covered by that Chapter that were issued, minus the cumulative tonnes of verified emissions covered by that Chapter for the period between 1 January [2027] and 31 December of that same given year and any allowances covered by that Chapter that were cancelled in accordance with Article 12(4) of Directive 2003/87/EC.’;

(3)In paragraph 5, the following subparagraph is added: ‘In any given year, if the total number of allowances in circulation is between 210 million and 260 million, additional allowances shall be released from the reserve. The additional amount shall be calculated by taking 100 million and subtracting twice the difference between the total number of allowances in circulation and 210 million. This additional amount shall be added to the quantity of allowances to be auctioned by the Member States under Article 10(2) of Directive 2003/87/EC beginning on 1 September of that year.’;

(4)In paragraph 7, the following sentence is inserted between the first and second sentence: ‘In the event that allowances are released from the reserve in accordance with Article 30h(2) of Directive 2003/87/EC, 20 million more allowances shall be added to the amount to be released from the reserve.’.

Article 2

This Decision shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Done at Brussels,

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

Contents

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned

1.3.Objective(s)

1.3.1.General objective(s)

1.3.2.Specific objective(s)

1.3.3.Expected result(s) and impact

1.3.4.Indicators of performance

1.4.The proposal/initiative relates to:

1.5.Grounds for the proposal/initiative

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments

1.5.5.Assessment of the different available financing options, including scope for redeployment

1.6.Duration of the proposal/initiative and of its financial impact

1.7.Method(s) of budget implementation planned

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

2.2.Management and control system(s)

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure)

2.3.Measures to prevent fraud and irregularities

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

3.2.Estimated financial impact of the proposal on appropriations

3.2.1.Summary of estimated impact on operational appropriations

3.2.1.1.Appropriations from voted budget

3.2.2.Estimated output funded from operational appropriations (not to be completed for decentralised agencies)

3.2.3.Summary of estimated impact on administrative appropriations

3.2.3.1. Appropriations from voted budget

3.2.4.Estimated requirements of human resources

3.2.4.1.Financed from voted budget

3.2.5.Overview of estimated impact on digital technology-related investments

3.2.6.Compatibility with the current multiannual financial framework

3.2.7.Third-party contributions

3.3.Estimated impact on revenue

4.Digital dimensions

4.1.Requirements of digital relevance

4.2.Data

4.3.Digital solutions

4.4.Interoperability assessment

4.5.Measures to support digital implementation

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE 

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned 

1.3.Objective(s)

1.3.1.General objective(s)

1.3.2.Specific objective(s)

1.3.3.Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

1.3.4.Indicators of performance

Specify the indicators for monitoring progress and achievements.

1.4.The proposal/initiative relates to: 

 a new action 

 a new action following a pilot project / preparatory action 6  

✓ the extension of an existing action 

 a merger or redirection of one or more actions towards another/a new action

1.5.Grounds for the proposal/initiative 

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments

1.5.5.Assessment of the different available financing options, including scope for redeployment

1.6.Duration of the proposal/initiative and of its financial impact

 limited duration

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY

–    financial impact from YYYY to YYYY for commitment appropriations and from YYYY to YYYY for payment appropriations.

✓ unlimited duration

–Implementation with a start-up period from YYYY to YYYY,

–followed by full-scale operation.

1.7.Method(s) of budget implementation planned

✓ Direct management by the Commission

–✓ by its departments, including by its staff in the Union delegations;

–    by the executive agencies

 Shared management with the Member States

 Indirect management by entrusting budget implementation tasks to:

– third countries or the bodies they have designated

– international organisations and their agencies (to be specified)

– the European Investment Bank and the European Investment Fund

– bodies referred to in Articles 70 and 71 of the Financial Regulation

– public law bodies

– bodies governed by private law with a public service mission to the extent that they are provided with adequate financial guarantees

– bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that are provided with adequate financial guarantees

– bodies or persons entrusted with the implementation of specific actions in the common foreign and security policy pursuant to Title V of the Treaty on European Union, and identified in the relevant basic act

–bodies established in a Member State, governed by the private law of a Member State or Union law and eligible to be entrusted, in accordance with sector-specific rules, with the implementation of Union funds or budgetary guarantees, to the extent that such bodies are controlled by public law bodies or by bodies governed by private law with a public service mission, and are provided with adequate financial guarantees in the form of joint and several liability by the controlling bodies or equivalent financial guarantees and which may be, for each action, limited to the maximum amount of the Union support.

Comments

2.MANAGEMENT MEASURES 

2.1.Monitoring and reporting rules 

2.2.Management and control system(s) 

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure) 

2.3.Measures to prevent fraud and irregularities 

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected 

·Existing budget lines

In order of multiannual financial framework headings and budget lines.

·New budget lines requested

In order of multiannual financial framework headings and budget lines.

3.2.Estimated financial impact of the proposal on appropriations 

3.2.1.Summary of estimated impact on operational appropriations 

–✓    The proposal/initiative does not require the use of operational appropriations

–    The proposal/initiative requires the use of operational appropriations, as explained below

3.2.1.1.Appropriations from voted budget

EUR million (to three decimal places)

3.2.2.Estimated output funded from operational appropriations (not to be completed for decentralised agencies)

Commitment appropriations in EUR million (to three decimal places)

3.2.3.Summary of estimated impact on administrative appropriations 

–✓    The proposal/initiative does not require the use of appropriations of an administrative nature

–    The proposal/initiative requires the use of appropriations of an administrative nature, as explained below

3.2.3.1. Appropriations from voted budget

3.2.4.Estimated requirements of human resources 

–✓    The proposal/initiative does not require the use of human resources

–    The proposal/initiative requires the use of human resources, as explained below

3.2.4.1.Financed from voted budget

Estimate to be expressed in full-time equivalent units (FTEs)

3.2.5.Overview of estimated impact on digital technology-related investments

Compulsory: the best estimate of the digital technology-related investments entailed by the proposal/initiative should be included in the table below.

Exceptionally, when required for the implementation of the proposal/initiative, the appropriations under Heading 7 should be presented in the designated line.

The appropriations under Headings 1-6 should be reflected as “Policy IT expenditure on operational programmes”. This expenditure refers to the operational budget to be used to re-use/ buy/ develop IT platforms/ tools directly linked to the implementation of the initiative and their associated investments (e.g. licences, studies, data storage etc). The information provided in this table should be consistent with details presented under Section 4 “Digital dimensions”.

3.2.6.Compatibility with the current multiannual financial framework 

The proposal/initiative:

–✓    can be fully financed through redeployment within the relevant heading of the multiannual financial framework (MFF)

–    requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation

–    requires a revision of the MFF

3.2.7.Third-party contributions 

The proposal/initiative:

–✓    does not provide for co-financing by third parties

–    provides for the co-financing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

3.3.    Estimated impact on revenue 

–✓    The proposal/initiative has no financial impact on revenue.

–    The proposal/initiative has the following financial impact:

–    on own resources

–    on other revenue

–    please indicate, if the revenue is assigned to expenditure lines

EUR million (to three decimal places)

4.Digital dimensions

4.1.Requirements of digital relevance

4.2.Data

4.3.Digital solutions

4.4.Interoperability assessment

4.5.Measures to support digital implementation

(1)    OJ L 130, 16.5.2023, pp. 134–202.

(2)    OJ C 326, 26.10.2012, p. 391.

(3)    OJ C , , p. .

(4)    OJ C , , p. .

(5)    Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1, ELI: http://data.europa.eu/eli/dec/2015/1814/oj ).

(6)    As referred to in Article 58(2), point (a) or (b) of the Financial Regulation.

(7)    Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.

(8)    EFTA: European Free Trade Association.

(9)    Candidate countries and, where applicable, potential candidates from the Western Balkans.

(10)    Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.).

(11)    As described in Section 1.3.2. ‘Specific objective(s)’

(12)    As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 20% for collection costs.