Liese Proposes Automatic EUA Release Trigger to Cap Carbon Price Swings
The lead MEP on ETS reform wants the market stability reserve to release 25 million allowances whenever prices spike more than 25% above their 12-month average.
Peter Liese, the European Parliament's lead negotiator on EU ETS reforms, published a draft proposal on Friday (2026-09-11) that would automatically release 25 million EU allowances from the market stability reserve whenever EUA prices have averaged more than 25% above the preceding 12-month average, Montel reported.6
The proposal arrives with ICE EUA Dec-rolling at €85.51 per tonne in Friday (2026-09-11) morning trade, well above the €80 mark that proved hard to breach as recently as Wednesday (2026-05-27), when profit-taking forced a sharp afternoon reversal after European carbon made an early run at that level.2,6
The current MSR mechanism releases allowances based on the total number of units in circulation — a volume rule. Liese's draft would layer on a price rule, using a three-month trailing average relative to the previous 12 months to calibrate automatic supply. It is a structural shift that would make the EUA market explicitly price-managed from 2030 and reshape how traders price the forward curve.6
Liese's draft is his initial response to the European Commission's July proposals, which themselves shifted the terrain. The Commission proposed cutting the linear reduction factor — the annual rate at which the ETS cap tightens — to 3.7%, a move framed as support for heavy industry, Montel reported.4
Together, the two proposals push toward looser supply conditions than ETS participants have operated under for much of the past decade. A slower reduction factor means more allowances in circulation across the trading period; automatic releases from the MSR on price spikes would pile on additional supply in a rising market.4,6
Energy Aspects had already flagged a supply overhang risk before Liese's draft appeared. The launch of the EU's Industrial Decarbonisation Bank and the ETS investment booster scheme could push more allowances into the market from next year, the consultancy told Montel in May (2026-05-21), and was likely to dampen prices.1
Liese is not campaigning against market liquidity. On Wednesday (2026-07-15) he argued publicly that financial companies should continue to be allowed to trade EU carbon allowances, pushing back against calls to limit their role. His concern then was market manipulation rather than the presence of financial actors. The automatic release mechanism reads as a price-stabilisation tool, not a gatekeeping one.3
The calibration of the 25% threshold matters for positioning. ICE EUA Dec-rolling at €85.51 on Friday (2026-09-11) morning would need to sustain a three-month average more than 25% above the prior 12-month average before the mechanism fires — a rough ceiling that sits some distance above current spot but is not implausible given the price trajectory since May. Whether 25 million allowances would be large enough to dent a sustained rally depends on net demand in 2030 and beyond, which Liese's draft does not address.6,2
The Montel excerpt also indicates the proposal covers a downside scenario — triggered when prices are more than 25% below the 12-month average — but the full text of those provisions is not available. The symmetry of the mechanism, and whether it would support prices in a downturn as well as cap them in a rally, cannot be assessed from what has been published.6
From 2036, the Commission's package would allow high-integrity international credits to meet up to 5% of the EU's net emissions reduction target. If such credits are unavailable, the linear reduction factor would revert to 2.7% rather than 1.7%, embedding a contingency with its own implications for long-dated EUA forward prices.5
Liese's draft is an opening position in a parliamentary process that must eventually produce a unified legislative text. How much of the price-trigger mechanism survives amendment from other MEPs, and how far the Council is willing to accept explicit price management written into the ETS framework, are the two variables to track as the negotiation advances.