Climate | Article
The market stability reserve in the EU emissions trading system : a critical review
31 October 2023
BY: Simone Borghesi, PAHLE Michael, PERINO Grischa, QUEMIN Simon, WILLNER Maximilian
Annual review of resource economics, 2023, Vol. 15, No.1, pp. 131-152
Having experienced low prices for about a decade, the European Union Emissions Trading System has been supplemented with the market stability reserve (MSR) that adjusts the supply of allowances to market outcomes. We critically review the literature assessing the performance of the MSR against several policy objectives. In doing so, we cover both conceptual aspects and quantitative assessments. We conclude by pointing out important policy implications and open issues for further research.
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