The European Commission is working on a legal proposal designed to prevent the automatic cancellation of surplus carbon permits within the EU emissions trading system. This initiative seeks to mitigate potential fluctuations in carbon prices, according to EU officials speaking to Reuters.
While the measure would not impose a cap on EU ETS prices, it would allow additional permits to be retained in the system’s market stability reserve. These permits could be introduced to the market if there is a significant increase in carbon prices in the future.
Internal negotiations over the plan are ongoing within the Commission, and the proposal may undergo changes before its expected publication next week.
(With inputs from agencies.)