OREANDA-NEWS. The UK Government has today published its position on the EU Emission Trading Scheme (EU ETS) Market Stability Reserve (MSR), which is currently being debated in the European Parliament.

The MSR has been proposed by the European Commission to ensure greater stability to the supply of EU ETS allowances, thereby maintaining the carbon price at times of surplus. However, under the initial proposal it is not due to start until 2021, meaning that without further reform the current surplus of EU ETS allowances would persist into the next decade.

In looking to address this, the UK Government has today given its support to the MSR coming in from 2017 and for the 900 million backloaded carbon allowances to be cancelled, or at least to be placed straight into the MSR.

Martin Pibworth, Managing Director, Wholesale said:

"SSE strongly welcomes the position the UK Government has taken on the MSR and wider EU ETS reform. Currently there is in the region of 2 billion allowances in the system depressing the carbon price and this surplus is forecast to increase.

The MSR will help to prevent a surplus of allowances from building up in the future and bringing it in from 2017 will help tackle the current surplus, and is critical to ensuring that the EU ETS is restored as the central driver for carbon reductions across Europe."