Parliament and Council amend carbon reserve for buildings and road transport

The European Parliament and the Council have amended the market stability reserve of the Union emissions trading system so that it can absorb supply and demand shocks in the new carbon market covering buildings, road transport and additional sectors. Decision (EU) 2026/2402, signed in Strasbourg on 21 October 2026 by R. Metsola and T. Dooley, was published in the Official Journal of the European Union on 28 October 2026 and enters into force twenty days later, on 17 November 2026.

The decision amends Decision (EU) 2015/1814 of 6 October 2015, which established the reserve for the existing emissions trading scheme and was extended by Directive (EU) 2023/959 of 10 May 2023 to the new system for buildings, road transport and additional sectors. It is based on Article 192(1) of the Treaty on the Functioning of the European Union and was adopted under the ordinary legislative procedure, following the position of the European Parliament of 15 September 2026 and the decision of the Council of 9 October 2026. The European Economic and Social Committee delivered its opinion in the Official Journal of 28 April 2026 and the Committee of the Regions was consulted.

The text carries EEA relevance. In its recitals, the European Commission’s analysis is cited as showing 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 emissions trading system”.

A lower trigger and a faster release

The core change rewrites Article 1a(5) of Decision (EU) 2015/1814 to add a second, lower trigger. When the total number of allowances in circulation sits between 210 million and 260 million, extra allowances are released from the reserve. The additional amount is calculated by taking 100 million and subtracting twice the difference between the total number of allowances in circulation and 210 million, and it is added to the volume auctioned by Member States from 1 September of that year.

Article 1a(7) is replaced to tighten the emergency mechanism:

• Volumes released under Article 30h of Directive 2003/87/EC are added to the allowances to be auctioned by Member States under Article 30d.
• Where allowances are released under Article 30h(2), 20 million more allowances are added to the amount released.
• The released volumes are spread evenly over three months, starting no later than two months after the date on which the conditions were met, as published in the Official Journal of the European Union under Article 30h(8).

A recital specifies that if the price-stability mechanism is applied twice within the same 12-month period, the additional release is to occur twice.

Longer validity and new transparency duties

Unreleased allowances placed in the reserve for buildings, road transport and additional sectors now remain valid beyond 31 December 2030, a change justified by the aim of increasing long-term market predictability.

Reporting duties are also reworked. Article 1a(4) is replaced so that the European Commission publishes the total number of allowances in circulation covered by Chapter IVa of Directive 2003/87/EC each year by 1 June, separately from the figure for the existing scheme. That total is the cumulative number of allowances issued minus cumulative verified emissions from 1 January 2028 and allowances cancelled under Article 12(4) of the directive. The first publication is due by 1 June 2028. The second sentence of Article 1a(3) is deleted.

Social fairness written into the review

A new paragraph in Article 3 requires the review of the decision to consider the number of remaining allowances, taking into account both environmental integrity and social fairness. Recital 9 adds that the European Commission’s report under Article 30i of Directive 2003/87/EC will include, as appropriate, an assessment of the price stability mechanisms under Article 30h and of how the reserve rules apply, and will consider whether the excessive price measure should be continued after 2029.

Recital 5 addresses spending: under Article 30d(6) of the directive, Member States should devote auction revenues from the new system to climate and energy purposes, giving priority to measures addressing its social aspects, including the national contribution to the estimated costs of the Social Climate Plan under Article 15 of Regulation (EU) 2023/955.

The decision lands before fuel suppliers, heating distributors and transport operators are drawn into carbon pricing, and it shapes the first price signals they will face. A lower release threshold and a faster, larger emergency release are designed to soften price spikes that would otherwise pass straight into heating bills and fuel costs, while the reporting calendar from 1 June 2028 gives the market its first official measure of the new system’s allowance surplus.

Source: Official Journal of the European Union, L series, No 2026/2402, 28 October 2026, legislation (official reference: Decision (EU) 2026/2402).