Today, Sandbag has released an online tool which allows users to change parameters to the Market Stability Reserve proposal, find out which changes would fix the EU Emissions Trading Scheme, and which changes would fail to tackle the enormous surplus of unneeded allowances that prevent the scheme from working.

The interactive tool is available, for free, here:

Commission proposal on the MSR vs Sandbag proposal

Which amendments will be most effective at returning the EU ETS to relevance as a driver of CO2 cuts? The tool shows how the current Commission proposal will leave a vast surplus on the market until at least 2027, and trigger a market crash at the end of Phase 3 as hundreds of millions of allowances flood the market. Sandbag's amendments would reach the Commission's desired threshold five years earlier, and cancel the backload and unused allowances to avoid a price crash.

How does the MSR perform under different emissions scenarios? The tool now includes the UK government projection for the ETS (3.1 billion by 2020), as well as the European Commission (2.6 billion) and Sandbag (4.5 billion) scenarios.

Sandbag is recommending the following Amendments to the Commission MSR proposal:

  • Cancel backloaded allowances
  • Cancel unallocated free allowances
  • Start the MSR in 2017
  • Calibrate the annual supply adjustments

We will continue to add features to the tool over the coming weeks, in order to model the different political group's amendments.