Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Decision (EU) 2015/1814 as regards ceasing the invalidation of allowances in the market stability reserve
Date: 2026-04-01
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU emission allowance, EU environmental policy, environmental protection, greenhouse gas, market, market stabilisation, reduction of gas emissions

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   EUROPEAN COMMISSION  Brussels, 1.4.2026  COM(2026) 153 final 2026/0085 (COD)  Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Decision (EU) 2015/1814 as regards ceasing the invalidation of allowances in the market stability reserve (Text with EEA relevance)  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
Directive  (EU)  2018/4101  amended  Decision  (EU)  2015/18142  concerning  the  operation  of 
the market stability reserve (MSR) for the Union greenhouse gas emission trading system (EU 
ETS). The purpose was improving the effectiveness and stability of the EU ETS in the long 
term,  including  by  invalidating  from  2023  onwards  allowances,  in  the  reserve  above  a 
threshold  equal  to  the  total  number  of  allowances  auctioned  during  the  previous  year.  This 
threshold  was  changed  by  Directive  (EU)  2023/9593  from  a  dynamic  threshold  to  a  fixed 
threshold of 400 million allowances from 2024, to ensure that the level of allowances in the 
reserve is predictable. 

Decision  (EU)  2015/1814  tasks  the  Commission  with  continuously  monitoring  the 
functioning of the reserve and reviewing the reserve on the basis of an analysis of the market 
for EU ETS allowances, and where appropriate making a legislative proposal. This proposal 
addresses a specific conclusion from  this review.  Since the provision  for the invalidation  of 
allowances  in  the  reserve  entered  into  force,  a  total  of  3.2  billion  allowances  have  been 
invalidated  and  the  balance  between  supply  and  demand  has  been  restored  to  the  EU  ETS. 
Allowing a greater number of allowances to remain in the MSR rather than invalidating them 
could  provide  an  essential  liquidity  buffer  to  manage  future  market  tightness  after  the  mid-
2030s and beyond. For this reason, allowances in the reserve should no longer be invalidated 
to  allow  a  larger  number  of  allowances  to  remain  in  the  reserve.  This  will  increase  the 
firepower of the  MSR for possible  future releases  in  the next  decade  to balance the market. 
This  targeted  amendment  contributes  to  safeguarding  the  orderly,  smooth  and  efficient 
operation of the EU ETS framework. The upcoming review of the MSR will, based on an in-
depth  forward  looking  analysis,  assess  the  appropriateness  of  the  parameters  used  to 
determine  whether  intakes  or  releases  take  place  and  propose  changes  where  necessary  to 
enable  the  MSR  to  continue  to  effectively  address  both  surplus  and  scarcity  situations,  to 
achieve EU climate targets. 

• 

Consistency with existing policy provisions in the policy area 

The MSR is  a tool  to  promote the stability  of the market  for EU ETS  emission allowances. 
The MSR ensures that the EU ETS is consistent with other policy areas. For instance, if other 
policies  are  successful  then  a  surplus  of  allowances  is  created  which  the  MSR  absorbs.  By 
contrast, if other policies are not successful and emissions remain high, the MSR supports the 
carbon market  by releasing extra allowances. This proposal  makes  a targeted change to  one 
parameter of the MSR without affecting its overall design and without directly affecting other 
Union policies.  

• 

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 

1 
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3 

OJ L 76, 19.3.2018, p. 3. 
OJ L 264, 9.10.2015, p. 1. 
OJ L 130, 16.5.2023, p. 134. 

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impact  assessment  accompanying  Directive  (EU)  2023/959  which  amended  Decision  (EU) 
2015/1814 with the remainder of the ‘Fit for 55’ package. 

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. These include 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, while the 
MSR  plays  an  important  role  in  the  operation  of  the  EU  ETS  as  a  tool  for  stability  of  the 
market for allowances established by Directive 2003/87/EC. 

• 

Subsidiarity (for non-exclusive competence)  

Climate change is a trans-boundary problem, where coordinated EU action supplements and 
reinforces national and local action more effectively than uncoordinated action. Coordination 
at EU level makes climate action more effective. 

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 alone. Due to the scale and 
effects of the system, these objectives can best be achieved at EU level. Similarly, as the MSR 
is a tool to ensure the stability of the market for EU ETS allowances established by Directive 
2003/87/EC, its objective 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, as this proposal does, 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  EU  ETS  emission 
allowances established by Directive 2003/87/EC. 

• 

Choice of instrument 

A  decision  is  the  appropriate  instrument  for  the  targeted  amendment  to  the  decision  that 
established the MSR. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EVALUATIONS, 

POST 

OF 

EX 

STAKEHOLDER 

Ex post evaluations/fitness checks of existing legislation 

The proposal considers the experience gained from operating the MSR and the invalidation of 
allowances held in the MSR above a certain level since 2023. The MSR functioning overall, 
through  the  intake  and  invalidation  mechanism,  has  successfully  fulfilled  its  purpose  of 
eliminating  the  historical  surplus  of  allowances  that  accumulated  from  the  2008  economic 

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crisis and the direct use of international credits in the EU ETS, thereby restoring confidence in 
the system and supporting a robust carbon price signal.  

From the time the MSR started operating in 2019, its total operational intake until the end of 
2024 was 2.7 billion allowances, well exceeding – together with the 900 million allowances 
from backloading in 2014 to 2016 which were placed in the reserve – the historical surplus.4 
Of those MSR holdings, 3.2 billion allowances have been invalidated by the end of 2024.  

The MSR successfully achieved its specific objective of reducing the historical surplus in the 
allowance market. The review has concluded that, in the next decade, the reserve should have 
larger holdings than the current 400million limit, to allow for releases to balance the market. 
Therefore, the invalidation of allowances held in the reserve should be stopped to allow for a 
larger number of allowances to remain in the reserve. 

• 

Stakeholder consultations 

The proposal builds on the stakeholder consultation from the 2021 review of the EU ETS and 
MSR and on the stakeholder consultation for the upcoming 2026 review of the EU ETS and 
MSR.  When  asked  about  potential  future  changes  to  the  MSR,  the  change  most  frequently 
considered  important  in  the  public  consultation  was  adjusting  the  invalidation  rule  for 
holdings in the reserve to raise it above 400 million allowances. This position was explained 
by the fact that the MSR has been effective in addressing the market surplus and by the need 
to  ensure  market  liquidity  and  for  stronger  intervention  to  prevent  price  volatility  going 
forward. 

The  proposal  further  builds  on  feedback  from  Member  States  and  regular  discussions  with 
national  competent  authorities  and  stakeholders  on  various 
the 
implementation of the EU ETS with a view to improving its functioning and effectiveness. 

issues  concerning 

• 

Collection and use of expertise 

Based  on  these  circumstances  and  the  timeline,  the  Commission  collected  feedback  from 
Member States and stakeholders on the best measures for achieving the proposal’s objectives 
of improving the functioning of the market for EU ETS emission allowances. 

• 

Impact assessment 

A  separate  impact  assessment  has  not  been  conducted  for  this  proposal,  as  it  has  benefited 
from  the  work  undertaken  for  the  impact  assessment  of  the  EU  ETS  and  the  MSR  for  the 
overall revision proposal planned for adoption by the Commission in July 2026. In addition, 
the Commission is tasked under Decision (EU) 2015/1814 with continuously monitoring the 
functioning of the reserve and, if necessary, proposing reviews to improve the effectiveness, 
administration  and  practical  application  on  the  basis  of  this  monitoring.  Moreover,  several 
elements  in  the impact  assessment accompanying Directive (EU) 2023/959, which amended 
the MSR, contribute to the assessment of the targeted change to the MSR in this proposal. 

The specific objective of the invalidation mechanism was to help reduce the historical surplus 
in the allowance market in a predictable way, contributing to the overall objective of the MSR 
of  ensuring  long-term  market  stability  and  resilience.  However,  the  indefinite  nature  of  the 

4 
In  2012,  there  was  an  excess  historical  surplus  of  917  million  European  Union  allowances  (EUAs).  
Considering the starting volume  of the total number of allowances in circulation (‘TNAC’) was 1 750 million 
EUA in 2012, everything above the MSR upper threshold of 833 million EUA can be assessed as being excess 
historical surplus. 

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current  invalidation  threshold  may  not  align  optimally  with  evolving  market  needs  and  the 
reducing  cap.  Ceasing  invalidations  allows  for  a  larger  pool  of  allowances  in  the  reserve, 
thereby providing a liquidity buffer for managing future market tightness from the mid-2030s 
and beyond. The analysis carried out in the context of the ETS review planned for adoption by 
the Commission in July 2026 indicated a need for a fast-tracked proposal to stop invalidating 
allowances held in the reserve as soon as possible to allow a larger number of allowances to 
remain in the reserve. 

In  the  evolving  market  context,  with  the  reduction  of  the  historical  surplus  and  forecasted 
market tightness, continued invalidation is forecast to reduce the cumulative allowance supply 
in the market that will be available over the next decades in the EU ETS, increasing overall 
scarcity in the market and leading to higher prices both today and in the future. This will in 
turn affect the overall objective of the MSR of ensuring market stability and resilience in the 
long term. 

This  proposal  therefore  provides  for  a  targeted  amendment  to  the  MSR  to  discontinue 
invalidation, without changing the overall design of the MSR. The purpose is to improve its 
ability  to  ensure  future  market  stability  and  resilience  based  on  up-to-date  information  by 
allowing a greater number of allowances to remain in the reserve as a liquidity and stability 
buffer.  

  • 

Fundamental rights 

The proposal respects fundamental rights and observes the principles outlined in the Charter 
of Fundamental Rights of the European Union5. 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  ETS  generates  significant  revenue  for  Member  States’  budgets  and  the  proposal  may 
indirectly affect  national budgets  primarily because of this link. The proposal  contributes  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 
budgetary 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  makes  a  targeted  amendment  to  the  provision  in  the  MSR  which  invalidates 
allowances held in the reserve above a certain level. The proposal builds on the conclusions of 
the  impact  assessment  for  the  2021  EU  ETS  and  MSR  review.  It  also  takes  into  account 
feedback from a majority of Member States and from other stakeholders in the context of the 
2026 ETS and MSR review as well as in-depth economic analysis carried out as part of that 
review. 

5 

OJ C 326, 26.10.2012, p. 391. 

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• 

Detailed explanation of the specific provisions of the proposal 

The proposal  sets  an end date  for the provision  in  the MSR Decision  which invalidates  EU 
ETS allowances above a level of 400 million.  

Since the start of application of Article 1(5a) of the MSR Decision in 2023, which provides 
for  invalidating  allowances  held  in  the  reserve  above  a  certain  level,  a  total  of  3.2  billion 
allowances  have  been  invalidated  and  the  balance  between  supply  and  demand  has  been 
restored to the EU ETS. Therefore, the invalidation provision has served its purpose. It should 
cease to apply from the date of entry into force of this amendment. The earlier the proposal is 
adopted, the more allowances could be prevented from being invalidated and could be held in 
the MSR.  

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2026/0085 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Decision (EU) 2015/1814 as regards ceasing the invalidation of allowances in 
the market stability reserve 

(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) 

The  Paris  Agreement  adopted  under  the  United  Nations  Framework  Convention  on 
Climate Change, approved on behalf of the European Union by Council Decision (EU) 
2016/18413, (the ‘Paris Agreement’) entered into force in November 2016. 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 Council4 established 
a market stability reserve in order to address the risk of supply and demand imbalances 
in the European carbon market and to improve its resilience to shocks. 

An analysis of the orderly functioning of the European carbon market and the market 
stability reserve carried out in accordance with Article 3 of Decision (EU) 2015/1814  
indicates that, in order to increase long-term market predictability, allowances held in 
the reserve above 400 million allowances should no longer be considered invalid.  

(4) 

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

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4 

OJ C , , p. . 
OJ C , , p. . 
Council  Decision  (EU)  2016/1841  of  5  October  2016  on  the  conclusion,  on  behalf  of  the  European 
Union, of  the  Paris  Agreement  adopted  under  the  United Nations  Framework  Convention on  Climate 
Change (OJ L 282, 19.10.2016, p. 1, ELI:  http://data.europa.eu/eli/dec/2016/1841/oj). 
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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HAVE ADOPTED THIS DECISION:  

In Article 5 of Decision (EU) 2015/1814, the following paragraph is added: 

“Article 1(5a) shall cease to apply from [insert date of entry into force of this act].” 

Article 1 

Article 2 

This  Decision  shall  enter  into  force  on  the  third  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 Commission Decision of the European Parliament and of the Council 
amending  Decision  (EU)  2015/1814  as  regards  ceasing  the  invalidation  of 
allowances in the market stability reserve. 

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  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. 

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  the  EU  ETS  market  liquidity,  stability  and 
predictability. 

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 action10  

✓ the extension of an existing action  

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

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 amendment to the parameters of the market stability reserve. 

10 

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

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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 EU emissions trading system 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 for 
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 complements 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 

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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. 

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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 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  

3 

09.02.03.00 

[XX.YY.YY.YY] 

[XX.YY.YY.YY] 

Diff./Non-
diff.11 

from 
EFTA 
countries
12 

from 
candidate 
countries 
and 
potential 
candidates
13 

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 

11 
12 
13 

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  

 

Type14 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 115… 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

14 
15 

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 

  EN 

 
  
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/initiative16 

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. 

16 

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