EWEA welcomes deal on reform of the ETS; carbon reserve in 2019

The surplus of allowances is currently suppressing the carbon price and failing to hold Europe's worst polluters to account over their emissions.

Policymakers have also agreed to transfer the backloaded and unallocated allowances into the market stability reserve before they flood the market at the end of the decade. The number of these allowances could be as high as 1.7 billion according to analyst estimates.

Ivan Pineda, Director of Public Affairs at the European Wind Energy Association, said: "The start date of 2019 shows that Member States are prepared to compromise. It is also pleasing to see that a substantial number of excess allowances will not be returning to the market and will instead go directly into the reserve."

He added: "But we have to acknowledge that Member States and the Parliament could have been far more ambitious in the shake-up of the carbon market and that a much more comprehensive reform is needed in order for this instrument to provide a meaningful signal to investors."