Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Decision (EU) 2015/1814 as regards the market stability reserve for the buildings, road transport and additional sectors
Date: 2025-11-27
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU emission allowance, auction sale, building, greenhouse gas, pollution control measures, reduction of gas emissions, reserves, road transport, tradeable emission permit

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   EUROPEAN COMMISSION  Brussels, 27.11.2025  COM(2025) 738 final 2025/0380 (COD)  Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Decision (EU) 2015/1814 as regards the market stability reserve for the buildings, road transport and additional sectors  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
Directive  (EU)  2023/9591  amended  Decision  (EU)  2015/1814  concerning  the  establishment 
and  operation  of  a  market  stability  reserve  for  the  Union  greenhouse  gas  emission  trading 
system and established a market stability reserve (MSR) for the emissions trading system for 
the buildings, road transport and additional sectors (ETS2). The MSR aims to mitigate the risk 
of supply and demand imbalances associated with the start of the ETS2 and to make it more 
resistant to market shocks. Market stability is essential for the ETS2 to function correctly in 
order  for  the  system  to  achieve  its  targets  of  providing  economic  incentives  to  reduce 
emissions across the sectors covered while avoiding undue price impacts. 

Decision  (EU)  2015/1814  tasks  the  Commission to  continuously  monitor the  functioning  of 
the  reserve  and  ensure  that  it  is  kept  fit  for  purpose.  If  necessary,  on  the  basis  of  this 
monitoring,  the  Commission  should  make  a  proposal  to  improve  the  effectiveness, 
administration and practical application of emissions trading for those sectors. 

Since the entry into force of the ETS2 in June 2023, a number of developments have provided 
further insights and information on expected future market liquidity, price levels and volatility 
in  the ETS2  market.  These developments  include the  experience gained  from  implementing 
the ETS2 by the Commission and national authorities, the start of monitoring and reporting of 
emissions, the wide range of projections in relation to future ETS2 allowance prices and the 
complexity  to  forecast  demand-side  market  indicators.  They  have  also  shed  light  on 
underlying factors that are expected to influence market stability and long-term predictability. 
These factors include the speed of implementation of Member States’ complementary policies 
and measures towards the 2030 energy and climate targets, and the invalidation of allowances 
not released from the reserve by 31 December 2030, which contributes to uncertainty over the 
long-term intervention capacity of the MSR. 

Moreover, on 5 November 2025, the Council reached an agreement on a general approach on 
the European Climate Law,  which introduced a  provision  to  postpone the application of the 
ETS2  by  one  year  to  2028.  The  European  Parliament  adopted  a  similar  position  on  the 
postponement of the ETS2 by one year on 13 November 2025. In addition, the Commission 
confirmed its intention to propose measures on the ETS2 implementation framework by end 
2025,  following  up  on  proposals  from  a  broad  majority  of  Member  States  and  from  many 
Members  of the European Parliament  to  smoothen the launch  of  and accelerate investments 
prior to the start of the ETS2. This proposal is part of the announced measures. 

This proposal adjusts some parameters of the MSR for ETS2 on the basis of updated market 
information  and  requests  from  a  majority  of  Member  States  and  from  stakeholders,  to 
improve  liquidity  in  the  supply-demand  balance  and  enhance  predictability  of  initial  price 
levels, without affecting the overall design of the MSR. The targeted amendments contribute 
to safeguarding an orderly, smooth and efficient market start and price trajectory for regulated 
entities,  enabling  national  authorities  and  fuel  consumers  to  optimally  prepare  through 

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OJ L 130, 16.5.2023, pp. 134–202. 

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adequate support and compensation measures. The Commission  will also regularly  examine 
and  publish  market  information  to  enable  consumers  and  stakeholders  to  have  a  clear 
understanding of market conditions.  

• 

Consistency with existing policy provisions in the policy area 

The  MSR  for  the  ETS2  is  a  tool  to  ensure  the    stability  of  the  market  for  ETS2  emission 
allowances.  The  consistency  of  the  MSR  for  the  ETS2  with  other  EU  policies  is  mainly 
ensured  through the consistency of the ETS2 with other Union policies. The current proposal 
only makes targeted changes to the parameters of the MSR for the ETS2 without affecting the 
overall design of the MSR, and it does not affect other Union policies directly. 

• 

Consistency with other Union policies 

Consistency  with  other  EU  policies  is  ensured  through  the  consistency  of  the  legislative 
framework in place for meeting the 2030 climate and energy targets. This is assessed in the 
impact assessment accompanying Directive (EU) 2023/959 of 10 May 2023 which amended 
Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 
with the remainder of the ‘Fit for 55’ package. This includes  the impact assessments related 
to the Effort Sharing Regulation; the Land Use, Land Use Change and Forestry Regulation; 
CO2 emissions performance standards for cars and vans; the Renewable Energy Directive; the 
Energy  Efficiency  Directive;  and  the  Energy  Performance  of  Buildings  Directive.  The 
proposed  change  to  the  MSR  for  ETS2  reflects  changes  in  demand  due  to  these  essential 
complementary policies. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  the  proposal  is  Article  192(1)  of  the  Treaty  on  the  Functioning  of  the 
European  Union  (TFEU).  In  accordance  with  Articles  191  and  192(1)  TFEU,  the  European 
Union  is  required  to  contribute  to  the  pursuit  of  several  objectives  including:  preserving, 
protecting  and  improving  the  quality  of  the  environment  and    promoting  measures  at 
international  level  to  deal  with  regional or worldwide environmental problems, in  particular 
combating  climate change.  The EU ETS  contributes to  combating  climate change;  as  a tool 
for stability of the market for allowances established by the EU ETS Directive, the MSR plays 
an important role in the operation of the EU ETS. 

• 

Subsidiarity (for non-exclusive competence)  

Climate  change  is  a  trans-boundary  problem.  For  trans-boundary  problems,  coordinated  EU 
action  can  supplement  and  reinforce  national  and  local  action  more  effectively  than 
uncoordinated action by Member States could achieve. Coordination at the EU level enhances 
the effectiveness of climate action. 

Therefore,  the  objectives  of  the  EU  ETS,  which  operates  as  an  EU-wide  system  in  a  fully 
harmonised  manner,  cannot  be  sufficiently  achieved  by  Member  States  acting  unilaterally. 
Due to the scale and effects of the system, these objectives can be better achieved at EU level. 
Similarly,    as  the  MSR  is  a  tool  for  stability  of  the  market  in  ETS2  emission  allowances 
established  by  the  EU  ETS  Directive,  its  objective  also  cannot  be  sufficiently  achieved  by 
uncoordinated action by Member States. 

Decision (EU) 2015/1814 is an existing EU measure in the area of combating climate change. 
In accordance with the principle of subsidiarity set out in Article 5 of the TFEU, amending it, 

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as is part of this proposal, cannot be achieved at national or local level, but requires action at 
EU level. 

• 

Proportionality 

The proposal complies with the proportionality principle because it does not go beyond what 
is necessary to achieve the EU’s greenhouse gas emission reduction target for 2030 in a cost-
effective  manner  while  ensuring  the  proper  functioning  of  the  market  in  ETS2  emission 
allowances established by the EU ETS Directive. 

• 

Choice of the instrument 

A decision is the appropriate instrument to amend the decision that lays down the MSR. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EVALUATIONS, 

POST 

OF 

EX 

STAKEHOLDER 

Ex post evaluations/fitness checks of existing legislation 

The  proposal  takes  into  account  the  experience  gained  from  implementing  the  EU  ETS 
Directive for the emissions trading system for road transport, buildings and additional sectors 
since its entry into force in June 2023. The impact assessment for the 2021 review of the EU 
ETS and MSR highlights that the ETS2 allowance price will depend on the implementation of 
complementary  policies  and  measures  supporting  the  decarbonisation  of  these  sectors.  The 
Commission’s  assessment  in  2025  of  National  Energy  and  Climate  Plans  shows  significant 
progress on Member States’ complementary policies and measures towards the 2030 energy 
and climate targets. It also identifies remaining gaps in the road transport and building sectors 
which need to be addressed to close in on these targets.  

• 

Stakeholder consultations 

The proposal provides for a targeted amendment to the parameters of the MSR for the ETS2 
to improve its functioning by the start of the market for ETS2 emission allowances. It builds 
on  the  stakeholder  consultation  from  the  2021  review  of  the  EU  ETS  and  MSR  and 
subsequent feedback from a majority of Member States and regular discussions with national 
competent  authorities  and  stakeholders  on  various  issues  concerning  ETS2  implementation 
with a view to improving its functioning and effectiveness. The diverging representations of 
complementary policies and measures in external short- and longer-term price projections for 
ETS2  result  in  a  wide  range  of  expectations  in  relation  to  future  ETS2  allowance  prices.  A 
majority of Member States expressed concerns related to the uncertainty around initial price 
levels  for  ETS2  allowances,  which  complicate  preparations  of  complementary  policies  and 
support measures needed to decarbonize these sectors. 

To  ensure  the  operational  integrity  and  predictability  of  the  ETS2  system,  the  targeted 
amendments  to  the  MSR  should  enter  into  force  swiftly.  The  proposal  is  subject  to  further 
time constraints since it is linked with the amendment of Commission Delegated Regulation 
(EU)  2023/2830  of  17  October  2023  on  the  timing,  administration  and  other  aspects  of 
auctioning of allowances. This brings forward the auctioning of allowances to the second half 
of 2026, which implies that this proposal should enter into force by this time when the market 
for ETS2 emission allowances starts. 

• 

Collection and use of expertise 

Based on these circumstances and the timeline, the Commission has collected feedback from 
Member  States  and  stakeholders  to  adopt  the  best  measures  to  achieve  the  proposal’s 

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objectives  to  improve  market  liquidity,  stability  and  predictability  of  the  market  for  ETS2 
emission allowances. 

• 

Impact assessment 

While a separate impact assessment was not conducted for this proposal, several elements in 
the  impact  assessment  accompanying  Directive  (EU)  2023/959  which  established  the  MSR 
for  the  ETS2  contribute  to  the  assessment  of  the  targeted  changes  to  the  parameters  of  the 
MSR in the current proposal. 

The  Commission  is  tasked  under  Decision  (EU)  2015/1814  to  continuously  monitor  the 
functioning of the reserve and, if necessary, to propose a review to improve the effectiveness, 
administration and practical application on the basis the monitoring.  

The  impact  assessment  accompanying  the  2021  Commission  proposal  already  noted  the 
complexity  of  setting  the  initial  parameters  of  the  MSR  for  the  ETS2  and  recognised  that 
these  parameters  would  therefore  need  to  be  improved  at  a  later  stage.  An  additional 
complexity  is  related  to  the  wide  range  of  ETS2  price  expectations  from  stakeholders  in 
relation to diverging representations of complementary policies and measures. 

The proposal provides for a targeted amendment to the parameters of the MSR for the ETS2 
without changing the overall design of the MSR, in order to further improve its effectiveness 
on the basis of updated information ahead of the system becoming fully operational.  

• 

Fundamental rights 

The proposal respects fundamental rights and observes the principles outlined in the Charter 
of Fundamental Rights of the European Union2. In particular, it contributes to the objective of 
a  high  level  of  environmental  protection  in  accordance  with  the  principle  of  sustainable 
development laid down in Article 37 of the Charter. 

4. 

BUDGETARY IMPLICATIONS 

The ETS2 will generate significant revenue for Member States’ budgets that must be used to 
address issues of social fairness. Most of the auctioning revenue goes to Member States, and 
the proposal may indirectly affect national budgets primarily because of this link. Improved 
market liquidity may increase Member States’ auction proceeds. However, this is expected to 
be compensated by the effect on the price of the additional market liquidity. The proposal will 
also  contribute  to  improving  long-term  price  predictability  for  Member  States  by  reducing 
price volatility. 

The  implementation  of  this  proposal  will  not  require  an  increase  in  the  Commission’s 
capacity, as set out in the attached legislative financial and digital statement. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The proposal provides for a targeted amendment to the MSR parameters for the ETS2, while 
respecting the overall design of the MSR, to improve its functioning by the time the market 
for ETS2 emission allowances becomes operational. The proposal builds on the conclusions 

2 

OJ C 326, 26.10.2012, p. 391. 

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of  the  impact  assessment  of    the  2021  EU  ETS  and  MSR  review  and  takes  into  account 
feedback from a majority of Member States and from other stakeholders. 

In addition to the changes proposed to Decision (EU) 2015/1814, the Commission states the 
following relating to the application of Article 30h of Directive 2003/87/EC:  

‘In  order  to  enhance  predictability  and  certainty  of  the  European  carbon  market  for  the 
buildings,  road  transport  and  additional  sectors,  the  Commission  considers  that,  if  the 
condition in Article 30h(2) of Directive 2003/87/EC is met again after six months, paragraph 
6 of Article 30h should be disapplied in accordance with the procedure set out in paragraph 
7.’  

• 

Detailed explanation of the specific provisions of the proposal 

The  proposal  contains  three  measures  to  improve  market  liquidity  in  order  to  strengthen 
market predictability, reduce volatility and further address excessive price increases: 

• 

• 

• 

To improve long-term liquidity and predictability in the market, Article 1(1) deletes 
the  second  sentence  concerning  the  invalidation  of  allowances  that  have  not  been 
released  from  the  reserve  by  31  December  2030.  Currently,  the  initial  600  million 
allowances  held  in  the  Market  Stability  Reserve  (MSR)  are  only  valid  until  31 
December  2030,  after  which  any  allowance  that  has  not  been  released  from  the 
reserve  will  no  longer  be  valid.  Removing  this  clause  helps  increase  market 
predictability and confidence among financial actors and market participants, thereby 
promoting price stability over time. 

Article  1(3)  modifies  the  injection  rate  mechanism  to  provide  a  more  gradual  and 
responsive  release  of  allowances  from  the  reserve  into  the  market.  It  proposes  an 
MSR  injection  when  the  total  number  of  allowances  in  circulation  (TNAC)  is 
between 210 million and 260 million. In such a case, the injection will be 100 million 
allowances  minus  twice  the  difference  between  the  TNAC  and  the  210  million 
threshold. The proposal addresses the ‘threshold effect’ that would take place when 
the  TNAC  is  very  close  to  the  lower  threshold,  which  determines  the  injection  of 
allowances from the MSR into the market. In that case, one allowance more or fewer 
in the TNAC may trigger an injection, depending on whether the TNAC is above or 
below the threshold. Uncertainty about whether this will happen risks creating price 
volatility on the market. This amendment helps preventing sudden and sharp supply 
fluctuations in the market and reducing price volatility, thereby contributing to both 
enhanced market stability and a stable price signal in the market for ETS2 emission 
allowances. 

Article  1(4)  adds  a  top-up  mechanism  of  20  million  allowances  to  the  number  of 
allowances  to  be  injected  under  the  excessive  price  control  mechanism  in  Article 
30h(2) of Directive 2003/87/EC. The objective is to further improve the reactivity of 
this mechanism to unwarranted price fluctuations and enhance market predictability. 
Directive  2003/87/EC  provides  a  mechanism  to  ensure  price  stability  in  the  early 
years  of  the  ETS2  by  releasing  20  million  allowances  from  the  MSR  if  the  carbon 
price exceeds the level of EUR 45 per tonne. In accordance with Article 30h(7), this 
measure  can  be  applied  twice  within  a  period  of  12  months.  This  amendment 
carefully  strengthens  this  mechanism  by  making  it  possible  to  release  a  higher 
number of allowances in the market to further improve market confidence, which is 
important for planning decarbonisation investments. 

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2025/0380 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Decision (EU) 2015/1814 as regards the market stability reserve for the 
buildings, road transport and additional sectors 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 192(1) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee1,  
Having regard to the opinion of the Committee of the Regions2,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

1 
2 
3 

The  Paris  Agreement,  adopted  in  December  2015  under  the  United  Nations 
Framework  Convention  on  Climate  Change  (UNFCCC)  entered  into  force  in 
November  2016  (‘the  Paris  Agreement’).  The  Parties  to  the  Paris  Agreement  have 
agreed to hold the increase in the global average temperature to well below 2 °C above 
pre-industrial  levels  and  to  pursue  efforts to  limit  the temperature increase to  1,5  °C 
above pre-industrial levels. 
Decision (EU) 2015/1814 of the European Parliament and of the Council3 established 
a  market  stability  reserve  in  order  to  mitigate  the  risk  of  supply  and  demand 
imbalances  associated  with  the  start  of  emissions  trading  for  the  buildings,  road 
transport and additional sectors, as well as to make it more resistant to market shocks. 

The analysis carried out of the expected functioning of the reserve, taking into account 
recent  information,  indicates  that  targeted  amendments  to  some  parameters  would 
contribute to improving market predictability and to the stability of price movements 
in the early years of the new system. 

OJ C , , p. . 
OJ C , , p. . 
Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning 
the  establishment  and  operation  of  a  market  stability  reserve  for  the  Union  greenhouse  gas  emission 
(OJ  L  264,  9.10.2015,  p.  1,  ELI: 
trading  scheme  and  amending  Directive  2003/87/EC 
http://data.europa.eu/eli/dec/2015/1814/oj). 

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(4) 

(5) 

(6) 

In  order  to  increase  long-term  market  predictability,  the  allowances  placed  in  the 
reserve  for  the  buildings,  road  transport  and  additional  sectors  that  have  not  been 
released should remain valid beyond 31 December 2030. 

In the event  that the total  number of allowances  in  circulation  reaches a level  below  
260  million  allowances,  a  more  gradual  and  responsive  release  of  allowances  would 
contribute  to  further  improving  market  stability  and  predictability  for  market 
participants.  Therefore,  the  injection  mechanism  should  take  into  account  the 
difference  between  the  total  number  of  allowances  in  circulation  and  the  lower 
threshold. 

In order to further improve its reactivity to unwarranted price fluctuations and increase 
market predictability, the mechanism to enhance price stability in the first three years 
of  the  emissions  trading  system  for  buildings,  road  transport  and  additional  sectors 
should  be  strengthened  in  a  careful  manner.  This  could  involve  releasing  a  higher 
volume of allowances in the market. If the measure is applied twice during the same 
12 months period, the additional release should occur twice. 

(7) 

Decision (EU) 2015/1814 should therefore be amended accordingly, 

HAVE ADOPTED THIS DECISION:  

Article 1a of Decision (EU) 2015/1814 is amended as follows:  

Article 1 

(1) 

(2) 

(3) 

(4) 

In paragraph 3, the second sentence is deleted; 

In paragraph 4, the second sentence is replaced by the following: ‘The total number 
of allowances in circulation under this Article in a given year shall be the cumulative 
number  of  allowances  covered  by  that  Chapter  that  were  issued,  minus  the 
cumulative  tonnes  of  verified  emissions  covered  by  that  Chapter  for  the  period 
between  1 January  [2027]  and  31  December  of  that  same  given  year  and  any 
allowances  covered  by  that  Chapter  that  were  cancelled  in  accordance  with 
Article 12(4) of Directive 2003/87/EC.’; 

In paragraph 5, the following subparagraph is added: ‘In any given year, if the total 
number  of  allowances  in  circulation  is  between  210  million  and  260  million, 
additional allowances shall be released from the reserve. The additional amount shall 
be calculated by taking 100 million and subtracting twice the difference between the 
total  number  of  allowances  in  circulation  and  210  million.  This  additional  amount 
shall be  added to  the quantity  of allowances to  be auctioned by the Member States 
under  Article  10(2)  of  Directive  2003/87/EC  beginning  on  1  September  of  that 
year.’; 

In  paragraph  7,  the  following  sentence  is  inserted  between  the  first  and  second 
sentence:  ‘In the  event  that  allowances are released from  the reserve in  accordance 
with  Article  30h(2)  of  Directive  2003/87/EC,  20  million  more  allowances  shall  be 
added to the amount to be released from the reserve.’. 

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Article 2 

This Decision shall enter into force on the  twentieth day following that of its publication in 
the Official Journal of the European Union. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT 

Contents 

1. 

1.1. 

1.2. 

1.3. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3 

Title of the proposal/initiative ...................................................................................... 3 

Policy area(s) concerned .............................................................................................. 3 

Objective(s) .................................................................................................................. 3 

1.3.1.  General objective(s) ..................................................................................................... 3 

1.3.2.  Specific objective(s) ..................................................................................................... 3 

1.3.3.  Expected result(s) and impact ...................................................................................... 3 

1.3.4. 

Indicators of performance ............................................................................................ 3 

1.4. 

1.5. 

The proposal/initiative relates to: ................................................................................. 3 

Grounds for the proposal/initiative .............................................................................. 4 

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative ............................................................ 4 

1.5.2.  Added value of EU involvement (it may result from different factors, e.g. 

coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this section 'added value of EU involvement' is the value resulting 
from EU action, that is additional to the value that would have been otherwise 
created by Member States alone. ................................................................................. 4 

1.5.3.  Lessons learned from similar experiences in the past .................................................. 4 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 
other appropriate instruments ....................................................................................... 4 

1.5.5.  Assessment of the different available financing options, including scope for 

redeployment ................................................................................................................ 4 

1.6. 

1.7. 

2. 

2.1. 

2.2. 

2.2.1. 

2.2.2. 

Duration of the proposal/initiative and of its financial impact .................................... 5 

Method(s) of budget implementation planned ............................................................. 5 

MANAGEMENT MEASURES................................................................................... 6 

Monitoring and reporting rules .................................................................................... 6 

Management and control system(s) ............................................................................. 6 

Justification of the budget implementation method(s), the funding implementation 
mechanism(s), the payment modalities and the control strategy proposed .................. 6 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them............................................................................................................ 6 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio between 

the control costs  and the value of the related funds managed), and assessment of the 
expected levels of risk of error (at payment & at closure) ........................................... 6 

2.3. 

3. 

Measures to prevent fraud and irregularities ................................................................ 6 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE .............. 7 

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3.1. 

Heading(s) of the multiannual financial framework and expenditure budget line(s) 
affected ......................................................................................................................... 7 

3.2. 

Estimated financial impact of the proposal on appropriations ..................................... 8 

3.2.1.  Summary of estimated impact on operational appropriations...................................... 8 

3.2.1.1.  Appropriations from voted budget ............................................................................... 8 

3.2.2.  Estimated output funded from operational appropriations (not to be completed for 

decentralised agencies)................................................................................................. 9 

3.2.3.  Summary of estimated impact on administrative appropriations ............................... 11 

3.2.3.1. Appropriations from voted budget .............................................................................. 11 

3.2.4.  Estimated requirements of human resources.............................................................. 11 

3.2.4.1.  Financed from voted budget....................................................................................... 11 

3.2.5.  Overview of estimated impact on digital technology-related investments ................ 12 

3.2.6.  Compatibility with the current multiannual financial framework.............................. 12 

3.2.7.  Third-party contributions ........................................................................................... 12 

3.3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

Estimated impact on revenue ..................................................................................... 13 

DIGITAL DIMENSIONS .......................................................................................... 13 

Requirements of digital relevance .............................................................................. 13 

Data ............................................................................................................................ 13 

Digital solutions ......................................................................................................... 13 

Interoperability assessment ........................................................................................ 13 

Measures to support digital implementation .............................................................. 13 

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1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Proposal  for  a  Decision  of  the  European  Parliament  and  of  the  Council  amending 
Decision (EU) 2015/1814 as regards the operation of the market stability reserve for 
the buildings, road transport and additional sectors. 

1.2. 

Policy area(s) concerned  

Climate action 

Heading 3 – Natural resources and environment 

Title 9 – Environment and climate action 

1.3. 

Objective(s) 

1.3.1.  General objective(s) 

The proposal aims to enhance the effectiveness of the market stability reserve for the 
buildings,  road  transport  and  additional  sectors  in  relation  to  the  balance  of  supply 
and demand. 

1.3.2. 

Specific objective(s) 

The  proposal  provides  for  targeted  amendments  to  the  parameters  of  the  market 
stability reserve for the buildings, road transport and additional sectors to improve its 
functioning by the time the ETS2 is fully operational. 

1.3.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The proposal is expected to improve market liquidity, stability and predictability by 
the time the ETS2 is fully operational. 

1.3.4. 

Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

The reserve addresses the structural balance of supply and demand for allowances in 
the market. 

1.4. 

The proposal/initiative relates to:  

 a new action  
 a new action following a pilot project / preparatory action6  

✓ the extension of an existing action  

 a merger or redirection of one or more actions towards another/a new action 

6 

As referred to in Article 58(2), point (a) or (b) of the Financial Regulation. 

EN 

3 

  EN 

 
1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative 

The  targeted  amendments  to  the  parameters  of  the  market  stability  reserve  for  the 
buildings, road transport and additional sectors aim to improve its functioning by the 
time the ETS2 is fully operational. 

1.5.2.  Added  value  of  EU  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the  purposes  of  this  section  'added  value  of  EU  involvement'  is  the  value  resulting 
from  EU  action,  that  is  additional  to  the  value  that  would  have  been  otherwise 
created by Member States alone. 

The emissions trading system for the buildings, road transport and additional sectors 
is an EU-wide instrument. 

1.5.3.  Lessons learned from similar experiences in the past 

Given the emission reduction target for 2030 and the climate neutrality objective to 
be  achieved  by  2050,  stronger  EU  action  is  needed,  including  by  ensuring  a  more 
effective, well-functioning and resilient carbon market. 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 

other appropriate instruments 

The proposal aims to complement the existing policy framework.    

It is compatible with the 2021-2027 multiannual financial framework. 

1.5.5.  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

- 

EN 

4 

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1.6. 

Duration of the proposal/initiative and of its financial impact 

 limited duration  

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–    financial  impact  from  YYYY  to  YYYY  for  commitment  appropriations  and 

from YYYY to YYYY for payment appropriations.  

✓ unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 

1.7.  Method(s) of budget implementation planned 

✓ Direct management by the Commission 

–  ✓  by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated 

–   international organisations and their agencies (to be specified) 

–   the European Investment Bank and the European Investment Fund 

–   bodies referred to in Articles 70 and 71 of the Financial Regulation 

–   public law bodies 

–   bodies governed by private law with a public service mission to the extent that 

they are provided with adequate financial guarantees 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  are  provided  with 
adequate financial guarantees 

–   bodies or persons entrusted with the implementation of specific actions in the 
common  foreign  and  security  policy  pursuant  to  Title  V  of  the  Treaty  on 
European Union, and identified in the relevant basic act 

–  bodies  established  in  a  Member  State,  governed  by  the  private  law  of  a 
Member  State  or  Union  law  and  eligible  to  be  entrusted,  in  accordance  with 
sector-specific  rules,  with  the  implementation  of  Union  funds  or  budgetary 
guarantees,  to  the extent that such bodies are controlled by public law bodies or 
by bodies governed by private law with a public service mission, and are provided 
with adequate financial guarantees in the form of joint and several liability by the 
controlling bodies or equivalent financial guarantees and which may be, for each 
action, limited to the maximum amount of the Union support. 

Comments  

The current team will continue managing the initiative. No additional staff are required. 

EN 

5 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

The proposal builds on the European Climate Law, including the same assessments 
carried  by  the  Commission  (as  is  already  the  case).  The  European  Climate  Law 
builds on the robust transparency framework for greenhouse gas emissions and other 
climate information set out in the Regulation on the Governance of the Energy Union 
and  Climate  Action,  rather  than  creating  additional  reporting  streams  by  Member 
States.  

2.2.  Management and control system(s)  

2.2.1. 

Justification  of  the  budget  implementation  method(s),  the  funding  implementation 
mechanism(s), the payment modalities and the control strategy proposed 

Not applicable. The proposal does not implement a financial programme but designs 
a  long-term  policy.  Management  mode,  funding  implementation  mechanisms, 
payment arrangements modalities and control strategies in relation to error rates are 
not applicable.  

2.2.2. 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them 

Under the ETS Directive, the Commission carries out regular assessment of progress 
with possible recommendations and additional measures. 

2.2.3.  Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio  between 
the control costs  and the value of the related funds managed), and assessment of the 
expected levels of risk of error (at payment & at closure)  

This initiative does not bring about new significant controls/risks that would not be 
covered be an existing internal control framework. No specific measures beyond the 
application of the Financial Regulation have been envisaged. 

2.3.  Measures to prevent fraud and irregularities  

No specific measures beyond the application of the Financial Regulation have been 
envisaged. 

EN 

6 

  EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

•  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

3 

09.02.03.00 

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

Diff./Non-
diff.7 

from 
EFTA 
countries8 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates9 

From 
other 
third 
countries 

other assigned 
revenue 

Diff. 

YES 

YES 

NO 

YES 

Diff./Non
-diff. 

Diff./Non
-diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

YES/NO  YES/NO  YES/NO 

YES/NO 

•  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff. 

from 
EFTA 
countries 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates 

from 
other 
third 
countries 

other assigned 
revenue  

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

Diff./Non
-diff. 

Diff./Non
-diff. 

Diff./Non
-diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

YES/NO  YES/NO  YES/NO 

YES/NO 

YES/NO  YES/NO  YES/NO 

YES/NO 

7 
8 
9 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

7 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
3.2. 

Estimated financial impact of the proposal on appropriations  

3.2.1. 

Summary of estimated impact on operational appropriations  

–  ✓  The proposal/initiative does not require the use of operational appropriations  

–    The proposal/initiative requires the use of operational appropriations, as explained below 

3.2.1.1.  Appropriations from voted budget 

Heading of multiannual financial framework  

Number 

EUR million (to three decimal places) 

DG: <…….> 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

Operational appropriations  

Budget line 

Budget line 

Commitments 

Payments 

Commitments 

Payments 

(1a) 

(2a) 

(1b) 

(2b) 

Appropriations of an administrative nature financed from the envelope of specific programmes  
Budget line 

(3) 

TOTAL appropriations 
for DG <…….> 

Commitments 

Payments 

Payments 

=1a+1b+3 

=2a+2b+3 

=2a+2b+3 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

operational 

appropriations  

Commitments 

(4) 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

EN 

8 

EN 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
 
Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

(5) 

(6) 

=4+6 

=5+6 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.2.  Estimated output funded from operational appropriations (not to be completed for decentralised agencies) 

Year  
2024 

Year  
2025 

Year  
2026 

Year  
2027 

OUTPUTS 

Commitment appropriations in EUR million (to three decimal places) 

Enter as many years as necessary to show the 
duration of the impact (see Section1.6) 

TOTAL 

o
N

Cost 

o
N

Cost 

o
N

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost 

o
N

Cost 

Total 
No 

Total 
cost 

Indicate 
objectives and 
outputs  

 

Type10 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 111… 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

10 
11 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in Section 1.3.2. ‘Specific objective(s)’  

EN 

9 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SPECIFIC OBJECTIVE No 2 ... 

- Output 

Subtotal for specific objective No 2 

TOTALS 

EN 

10 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3. 

Summary of estimated impact on administrative appropriations  

–  ✓  The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–    The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below 

3.2.3.1. Appropriations from voted budget 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL 
2021 - 2027 

HEADING 7 

Human resources  

Other administrative expenditure  

Subtotal HEADING 7 

Outside HEADING 7 

Human resources  

Other expenditure of an administrative nature 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.4.  Estimated requirements of human resources  

–  ✓  The proposal/initiative does not require the use of human resources  

–    The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below 

3.2.4.1.  Financed from voted budget 

Estimate to be expressed in full-time equivalent units (FTEs) 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation Offices) 

20 01 02 03 (EU Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

• External staff (inFTEs) 

20 02 01 (AC, END from the ‘global envelope’) 

20 02 03 (AC, AL, END and JPD in the EU Delegations) 

Admin. Support 
line 
[XX.01.YY.YY] 

- at Headquarters 

- in EU Delegations  

01 01 01 02 (AC, END - Indirect research) 

 01 01 01 12 (AC, END - Direct research) 

Other budget lines (specify) - Heading 7 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

EN 

11 

  EN 

 
  
 
 
Other budget lines (specify) - Outside Heading 7 

TOTAL 

0 

0 

0 

0 

0 

0 

0 

0 

3.2.5.  Overview of estimated impact on digital technology-related investments 

Compulsory: the best estimate of the digital technology-related investments entailed 
by the proposal/initiative should be included in the table below.  

Exceptionally,  when  required  for  the  implementation  of  the  proposal/initiative,  the 
appropriations under Heading 7 should be presented in the designated line.  

The appropriations under Headings 1-6 should be reflected as “Policy IT expenditure 
on operational programmes”. This expenditure refers to the operational budget to be 
used to re-use/ buy/ develop IT platforms/ tools directly linked to the implementation 
of the initiative and their associated investments (e.g. licences, studies, data storage 
etc).  The  information  provided  in  this  table  should  be  consistent  with  details 
presented under Section 4 “Digital dimensions”. 

TOTAL Digital and IT appropriations 

Year 

Year 

Year 

Year 

2024 

2025 

2026 

2027 

TOTAL 
MFF 
2021 - 
2027 

HEADING 7 

IT expenditure (corporate)  

Subtotal HEADING 7 

Outside HEADING 7 

Policy IT expenditure on operational 
programmes 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.6.  Compatibility with the current multiannual financial framework  

The proposal/initiative: 

–  ✓  can be fully financed through redeployment within the relevant heading of the 

multiannual financial framework (MFF) 

No  additional  resources  required.  The  current  team  will  continue  managing  the 
initiative. 

–    requires use of the unallocated margin under the relevant heading of the MFF 

and/or use of the special instruments as defined in the MFF Regulation 

–    requires a revision of the MFF 

3.2.7.  Third-party contributions  

The proposal/initiative: 

–  ✓  does not provide for co-financing by third parties 

–    provides for the co-financing by third parties estimated below: 

Appropriations in EUR million (to three decimal places) 

EN 

12 

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Year  
2024 

Year  
2025 

Year  
2026 

Year  
2027 

Total 

Specify the co-financing body  

TOTAL appropriations co-
financed  

3.3. 

Estimated impact on revenue  

–  ✓  The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

–   on own resources  

–   on other revenue 

–   please indicate, if the revenue is assigned to expenditure lines 

Appropriations 
available for the 
current financial 
year 

     EUR million (to three decimal places) 

Impact of the proposal/initiative12 

Year 2024 

Year 2025  Year 2026 

Year 2027 

Budget revenue line: 

Article …………. 

4. 

DIGITAL DIMENSIONS 

4.1. 

Requirements of digital relevance 

No requirements of digital relevance. 

4.2. 

Data 

No requirements of digital relevance identified. 

4.3. 

Digital solutions 

No requirements of digital relevance identified. 

4.4. 

Interoperability assessment 

No requirements of digital relevance identified. 

4.5.  Measures to support digital implementation 

No requirements of digital relevance identified. 

12 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 20% for collection costs. 

EN 

13 

  EN