Insights Blog

This blog post shares insightful information upon carbon pollution.

The Market Stability Reserve (MSR) aims to provide carbon price stability for the EU emissions trading system (EU ETS). But serious questions are being asked about how much stability – if any – it provides, say Michael Pahle and Simon Quemin. They argue that the MSR rules are too complex, have difficulty accommodating changing EU and national policies, and can cause regulatory uncertainty as well as market speculation. The authors recommend a reform of its core design – focussing on prices, not quantities of carbon allowances – instead of adjustments that make it even more complex and vulnerable to its existing weaknesses.

In the face of deep economic and social crisis resulting from the COVID-19 pandemic, some countries and business groups have been calling for a temporary easing of environmental rules. In fact, many stimulus measures show a significant lack of consideration when it comes to addressing environmental sustainability. Giving up on some environmental commitments to address short-term social and economic priorities would be a mistake.