The ETS2 price brake received its final green light on Friday 9 October 2026, when EU finance ministers adopted the revised Market Stability Reserve rules at a meeting in Luxembourg. The decision closes a negotiation that the Cyprus Presidency led, and it sets the safeguards that will apply when the new carbon market for road fuels and buildings starts in 2028.
The mechanism works through supply. When the carbon price climbs above €45 per tonne of CO2, expressed in 2020 prices and adjusted for inflation, the reserve releases 40 million extra allowances into the market instead of the usual 20 million. More permits should push the price down, so the ETS2 price brake acts as a pressure valve rather than a ceiling.
That distinction matters for households. Fuel suppliers, not drivers or tenants, buy the permits under ETS2, but suppliers are expected to pass the cost on through petrol, diesel and heating bills. Because the ETS2 price brake sets no legal cap, the price can still rise above €45 if demand outruns the extra supply.
The path to approval was short by EU standards. Council and Parliament negotiators reached a provisional agreement in June 2026, and members of the European Parliament endorsed the text in September. Cyprus environment minister Maria Panayiotou said at the time of the June deal that the adjustments would improve market liquidity and reduce price volatility.
The revised rules go beyond the €45 trigger. The reserve will keep operating after 2030, and releases will become more gradual when allowances grow scarce. Those changes give the ETS2 price brake a longer-term footing, which investors in insulation, heat pumps and electric vehicles had requested.
The text enters into force 20 days after publication in the Official Journal of the European Union. The Commission must then assess the system by October 2027, looking at whether it works as designed and whether it protects vulnerable households enough. That review falls just before the start of trading in 2028, so it will be the last formal check before consumers feel the price.
Energy costs framed the political backdrop. The day before the Council vote, eurozone finance ministers backed targeted help for people struggling with high energy bills. The Commission warned that broad subsidies could push prices higher, which is why ministers favoured support aimed at the households that need it most.
Critics will focus on what the deal leaves out. Campaigners for lower bills wanted a hard price ceiling, while climate groups feared that any extra supply weakens the incentive to cut fossil fuel use. The compromise sits between those positions, and its credibility will depend on how the Commission uses its review.
For member states, the practical task now shifts to the Social Climate Fund and national support schemes. Governments that want public backing for ETS2 need to show citizens that revenue reaches those who face the highest heating and transport costs, because the ETS2 price brake alone will not shield them.
Businesses and fuel suppliers should also prepare. The ETS2 price brake decision tells them when extra permits appear, how large the release will be and how long the safeguard lasts, so they can price contracts with more confidence. Anyone watching ETS2 should track the Official Journal publication date, because it starts the 20-day countdown to the ETS2 price brake taking legal effect.
