In January 2019, the so-called Market Stability Reserve (MSR) became operational. This mechanism adjusts the annual supply of CO2 emission permits based on the CO2 permits in circulation to correct the imbalances in supply and demand in the European carbon market. The MSR will be further strengthened in the next phase of the ETS (as set out in the Fit for 55 package of July 2021). The number of allowances to be put in the Market Stability Reserve (MSR) of the EU Emissions Trading System (ETS) is set at 24% of the total number of allowances in circulation.
This implies that if you buy CO2 emission permits now and 'destroy' them, the MSR will take in a lower amount of permits than if you had not destroyed it, because it would be still in circulation (0.24 permits are not taken in). You may ask yourself the question whether it still makes sense to destroy a carbon credit?
The answer is that Carbonkiller is not a carbon offsetting programme. Carbonkiller's mission is a different one. We want to campaign and to pressure politicians to act and put a price on pollution. We welcome the reforms as a step in the right direction, but we believe we're not there by a long shot. For instance because the MSR is far from perfect. The current design still allows rights back on the market when scarcity arises. In addition, when coal-fired power plants halt their activities due to higher carbon price and climate policies, huge amounts of credits will flow back to the market. As long as the Market Stability reserve is not able to sufficiently remove the current oversupply of credits, Carbonkiller will continue to campaign for an improved Market Stability reserve and Emission Trading System.
The act of buying and destroying CO2 permits by individuals, businesses and organisations is therefore first and foremost a campaigning tool. We don't promote it as a measure for reducing personal carbon footprints. Increased social pressure on decision makers is needed to make sure they make meaningful changes to the system and Europe meet its goal of reducing greenhouse gas emissions.