EU Readies Carbon Allowance Cuts to Reduce Surplus This Fall

摘要

Power plants and other participants in the European Union’s emissions trading system will starting in September, because of the removal of a block of allowances from the system. The number of carbon allowances that could be auctioned between September 2019 and August 2020 would be cut by 400 million on the basis that there are too many allowances, according to the European Commission, the EU’s executive arm. About 1.65 billion too many carbon allowances, each of which represents the right to emit one metric ton of carbon dioxide, were circulating in the ETS in 2018, the commission said May 15. The 400 million allowances to be removed represent 24% of the total surplus amount. The adjustment to the ETS will be done under a mechanism agreed in 2015 known as the market stability reserve (MSR), which permits removal of allowances when the surplus exceeds 833 million. The MSR took effect at the start of 2019, and the removal of 400 million allowances will come on top of the removal of 265 million allowances over January to August 2019, calculated on the basis of the surplus in 2017.