EU ETS faces crisis as Covid-19 threatens carbon market stability
The European carbon market may be affected by the Covid-19 crisis, leading to a review of the EU ETS supply mechanisms. The Market Stability Reserve (MSR) may not be able to prevent supply-demand imbalances, even with a doubled withdrawal rate. Revisiting the design of the MSR, introducing a carbon price floor, and considering hybrid solutions could help manage the impact on the market.