Ministers on the European Council agreed the creation of a market stability reserve for the ETS – the world’s flagship carbon-trading scheme – from 2019.

The reserve mechanism will withdraw emissions allowances when the number in the market exceeds a pre-set threshold, or inject them when they fall below a minimum.

The new system is designed to avoid the surpluses that have bedeviled the ETS, leaving supply of the tradable emissions allowances running far ahead of target, driving down their price and reducing the incentive to invest in clean alternatives such as wind and solar.

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