EU plans to end carbon permit cancellation for stability
The EU aims to stop canceling excess carbon permits to build a supply buffer. This plan seeks to stabilize energy costs amid volatility from the Iran war.
The European Union is evaluating a plan to end the automatic cancellation of surplus EU Emissions Allowance (carbon permit) in its emissions trading system (ETS), according to officials familiar with the matter. The draft proposal is intended to prevent future price volatility within the carbon market, which serves as the primary tool for the bloc to meet its climate objectives.
The strategy is part of a broader effort to address the surge in energy prices exacerbated by the war in Iran. Several governments, including Poland and Italy, have called for intervention to reduce the financial burden the ETS places on electricity bills. While the ETS requires industrial plants and power providers to purchase permits for their emissions, these costs are frequently passed on to the end consumer.
