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On 08.05.2020, the EU published the amount of allowances in circulation for 2019.

The amount of allowances in circulation has fallen from 1.66 billion (2018) to 1.38 billion (2019).

As the quantity of allowances in circulation exceeds the limit of 0.833 billion, 24% of this quantity of allowances in circulation is allocated to the Market Stability Reserve (MSR), i.e. 0.332 billion EUAs.

Accordingly, Member States will auction 332 million fewer EUAs between September 2020 and August 2021, further tightening supply.

Background:

The MSR introduced by the EU takes effect from 2019.
It functions in a similar way to a central bank and has the task of keeping the available quantity of certificates and thus indirectly also the EUA price within a certain range.
It has been one of the most important price drivers recently for the EEA, along with the tightening of allocations in the 4th trading period.
Without the MSR, the price of EUA would certainly have fallen significantly in the wake of the Corona crisis.

Author: Markus Kasten

Date: 12.05.2020

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