Design options for the Market Stability Reserve in the EU ETS

Published: 08/01/2015

Ecofys, together with LSE, has looked closely at the design options possible for a Market Stability Reserve (MSR) in the EU ETS for the UK Department of Energy and Climate Change. This study including the theoretical basis for an MSR, the potential types of triggers, examples of similar reserves for other commodities, and the potential advantages and disadvantages of different designs. Different design options have been modelled, using a model developed by Luca Taschini at LSE, to indicate the way in which an MSR might operate. The report makes some recommendations about the suitability of the EU’s MSR proposal to achieve its stated goals, and the appropriate next steps. 

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Climate Strategies and Policies