Below are the main takeaways from Wednesday’s EU Council agreement on a common position regarding the MSR, according to a text of the decision seen by Carbon Pulse:

– MSR should be established in 2018 and it should be operational as of 2019.

– Unallocated allowances should be placed in the reserve in 2020. The European Commission should then examine this under its ETS Directive review and, if appropriate, submit a proposal to the European Parliament and to the Council on options for further action.

– The 900 million backloaded allowances should be put in the reserve instead of sold back to the market in 2019 and 2020.

– Council rejected Parliament’s clause about setting aside 300 million allowances to set up an industrial innovation fund, and removed an earlier amendment agreed by member states that reduced that figure to 75 million.

– EC to publish the total number of allowances in circulation in preceding year starting May 15, 2017.

– EC to publish, within three years of the start of operation and at five year intervals thereafter, a report analysing the MSR’s functioning, paying particular attention to the percentage figure used to determine how many allowances are put in the reserve and the quantitative thresholds related to the number in circulation and governing how many are to be released.

– EC should also monitor MSR’s impact on the EU’s competitiveness, in particular that of the industrial sector, as well as on economic growth, employment and the risk of carbon leakage.

A spokeswoman for the Czech environment ministry told Carbon Pulse that EU member states had also agreed that a “solidarity fund”of EUAs earmarked for poorer countries, created under the bloc’s 2030 climate package last autumn, should remain unaffected by the MSR.

The EU in October agreed that between 2021 and 2030 some 10% of all allowances to be auctioned will be ringfenced for less wealthy EU member states “for the purposes of solidarity, growth and (electricity) interconnections”.

By Mike Szabo – mike@carbon-pulse.com