EU Parliament Committee Backs ETS Permit Cancellations Through February
Thursday's environment committee vote preserves the MSR supply mechanism, but full Parliament and Council approval remain outstanding before any rule change takes effect.
The European Parliament's environment committee voted on Thursday (2026-09-10) to back the cancellation of ETS allowances held in the market stability reserve until February, Montel reported.5
The MSR works as a buffer: when surplus allowances accumulate beyond set thresholds, the reserve automatically invalidates — permanently removes — a share of them. Keeping that mechanism active through February limits the volume of permits that could re-enter the market, a meaningful consideration for anyone running a long carbon position into year-end.4
The vote was not unexpected. Thomas Haahr, a spokesman for the committee, said on Thursday (2026-06-25) that the environment committee planned to hold a vote on this proposal in September, also per Montel.4
But the direction of travel had been less clear earlier in the summer. In early June (2026-06-05), at least one MEP publicly suggested the EU could agree to stop cancelling ETS permits altogether — a signal that would have pointed toward looser near-term supply.1 The committee's backing for continued cancellations on Thursday (2026-09-10) settles that ambiguity, at least at this stage.5
How much supply is actually at stake depends on the number of permits currently sitting in the reserve, a figure the available reporting does not specify. What the vote preserves is the mechanism that has acted as the main structural driver of ETS supply tightness over recent years.5,4
Separately, EEX confirmed it will halt REPowerEU carbon auctions once the bloc's €20 billion funding target is reached, the CEO said, per Carbon Pulse.2 Those auctions have added allowances into the market. Their eventual cessation removes one bearish overhang, though the timing depends on when the target is hit rather than a fixed calendar date.
The committee position is one step in a longer process. A committee vote does not carry the force of law. Any formal revision to the MSR cancellation rules requires a full Parliament vote and Council agreement, since EU legislation governs those rules, and inter-institutional negotiation lies ahead before anything is legally settled.4
The wider policy context gives the vote added weight. EU member states agreed earlier this year to extend carbon price spike-management tools beyond 2030 in preparation for EU ETS2, which will cover road transport and buildings, Euronews reported on 18 February (2026-02-18).3 How ETS1 supply is managed in the near term feeds into market expectations about ETS2 price levels at launch.
ICE Endex TTF front-month gas closed at €79.51/MWh on 2026-09-13, according to price data. European carbon prices have no verified level in Monday's (2026-09-14) early session data from the packet, so directional assessment is not possible from available sources.
For traders in ICE EUA Dec-rolling contracts, the practical question is what February represents as a review point. If the cancellation mechanism is revisited or wound back at that point, a period of supply uncertainty could follow in early 2027. The full Parliament vote and Council negotiations are the next formal milestones.5,4