Non-paper on ETS2 price levels & volatility

The signatories support improving demand information and early auctions for ETS2 to increase credibility and investment. However, they oppose weakening MSR2 release conditions or extending its lifetime, arguing these measures would increase total emissions and undermine EU climate targets and the Effort Sharing Regulation. Instead, they advocate for complementary policies to reduce emissions demand, such as clean technology subsidies and the fair distribution of revenues via the Social Climate Fund.

• The authors support two specific options from a Member State Non-paper: improving information on emissions demand and starting auctions for the first year of ETS2 operation early, as these steps encourage investments to move away from fossil fuels.
• Weakening the conditions for releasing MSR2-allowances or extending the MSR2 lifetime (options 3, 4, and 5) would lower prices by increasing emissions, which risks undermining EU climate policy and making it difficult for countries to meet Effort Sharing Regulation commitments.
• Current rules for the MSR2 are expected to result in only a small proportion of allowances being used, with an estimate that 467-600 million allowances will be invalidated in 2031 when the MSR2 ends.
• To stabilize ETS2 prices without increasing emissions, Member States should focus on reducing demand through complementary policies such as regulations, clean technology subsidies, phasing out fossil fuel subsidies, or national carbon floor prices.
• Social acceptance of carbon pricing should be addressed through the fair distribution of revenues, including the Social Climate Fund and the proper use of ETS2 revenues by Member States, rather than through price control mechanisms.

APA

Carbon Market Watch (n.d.). Non-paper on ETS2 price levels & volatility. https://carbonmarketwatch.org/wp-content/uploads/2025/09/MSR2-reforms_EEB_CANE_LIFEeffect.pdf

Chicago

Carbon Market Watch. Non-paper on ETS2 price levels & volatility. n.d. https://carbonmarketwatch.org/wp-content/uploads/2025/09/MSR2-reforms_EEB_CANE_LIFEeffect.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Non-paper on ETS2 price levels & volatility |url=https://carbonmarketwatch.org/wp-content/uploads/2025/09/MSR2-reforms_EEB_CANE_LIFEeffect.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatchndnonpaper, author = {{Carbon Market Watch}}, title = {{Non-paper on ETS2 price levels \& volatility}}, publisher = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2025/09/MSR2-reforms_EEB_CANE_LIFEeffect.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }