On 27 February 2018 the Council formally approved the reform of the EU emissions trading system (ETS) for the period after 2020.

The revised ETS directive is a significant step towards the EU reaching its target of cutting greenhouse gas emissions by at least 40% by 2030, as agreed under the EU's 2030 climate and energy framework, and fulfilling its commitments under the Paris Agreement.

The emissions trading system is reformed by introducing the following elements:

• The cap on the total volume of emissions will be reduced annually by 2.2% (linear reduction factor).
• The number of allowances to be placed in the market stability reserve will be doubled temporarily until the end of 2023 (feeding rate).
• A new mechanism to limit the validity of allowances in the market stability reserve above a certain level will become operational in 2023.