The European Commission has adopted a Communication on the total number of allowances in circulation (TNAC) on the European carbon market. In 2023 this number stood at 1 111 736 535.
The TNAC indicator plays an important role in the functioning of the Market Stability Reserve (MSR) of the EU Emissions Trading System (ETS). It determines whether allowances are withdrawn or released from the MSR.
This is the first Communication on the TNAC since the operation of the MSR was amended as part of the ‘Fit for 55’ legislative package, revising Decision 2015/1814 (MSR Decision) and Directive 2003/87/EC (ETS Directive), and since the changes set out in Regulation (EU) 2023/435 (REPowerEU Regulation) in February 2023, as part of the EU’s response to the energy crisis.
Under the MSR Decision, 24% of the total allowances are placed in the reserve if the number exceeds the threshold of 1.096 billion. This leads to a decrease of the volume of allowances that Member States auction. This year’s Communication also reflects the updated formula for the calculation of the TNAC, according to the revised Article 1(4) of the MSR Decision.
In line with the MSR Decision and based on the published TNAC indicator, a total of 266 816 768 allowances will be placed in the MSR over a 12-month period, from 1 September 2024 to 31 August 2025.
Under Article 1(5a) of the MSR Decision, from 2023 onwards, any allowances held in the MSR above 400 million allowances are no longer valid. In line with the REPowerEU Regulation, 27 million allowances were set aside for the Innovation Fund under Article 10e(4) of the ETS Directive. The adopted Communication indicates that 381 744 844 allowances in the MSR therefore became invalid on 1 January 2024.
The TNAC indicator will next be published on 1 June 2025.
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Communication on the total number of allowances in circulation
Previous Communications on the total number of allowances in circulation – MSR indicator
