The agreement, reached by the Council and European Parliament on 20th October and announced the following day, raises the invalidation threshold of the EU Emissions Trading System’s market stability reserve from 400 million to 700 million allowances.
The compromise reached by EU negotiators follows months of pressure from energy-intensive industries concerned about carbon prices, electricity costs and competition from manufacturers operating under less restrictive environmental regimes.
The measure requires formal approval before entering into force and forms part of a wider review of the EU’s principal carbon-pricing mechanism.
Established in 2019, the market stability reserve was designed to address the accumulation of surplus emissions allowances that had weakened the effectiveness of Europe’s carbon market.
Under the Emissions Trading System, companies in covered sectors must surrender allowances corresponding to their greenhouse gas emissions. The total quantity available is progressively reduced, creating a financial incentive to cut emissions.
The reserve adjusts the supply of allowances entering the market, withdrawing them when there is a substantial surplus and releasing them under specified conditions when supply becomes scarce.
Existing rules also provide for the permanent cancellation of allowances held above a threshold of 400 million.
Under the new agreement, that threshold would increase to 700 million, allowing a larger stock to remain available for potential future release.
The change does not automatically introduce 300 million additional allowances into circulation. Releases would continue to depend on the reserve’s operating rules and market conditions.
According to the Council, more than three billion allowances have been invalidated since the mechanism began operating in 2023.
The Commission initially proposed ending automatic invalidation indefinitely, while the Council’s September negotiating position envisaged a temporary suspension followed by a higher threshold.
The compromise retains invalidation but increases the amount protected from cancellation.
The agreement follows growing concern about the cumulative cost of European climate regulation, particularly for steelmaking, chemicals, cement and other energy-intensive sectors. Manufacturers have warned that carbon costs, combined with relatively expensive electricity and industrial gas, complicate investment decisions and weaken their ability to compete internationally.
Brussels must also consider the consequences of production shifting to jurisdictions with lower emissions-related costs, a phenomenon known as carbon leakage. Earlier this year, EU Today examined the Commission’s consideration of changes to industrial protections under the ETS, including the relationship between free allowances and the Carbon Border Adjustment Mechanism.
The latest reserve agreement does not directly change the allocation of free allowances, the emissions cap or the obligations imposed on individual industrial installations. Its principal effect would be to preserve a larger buffer that could become available if future market conditions trigger the release mechanism.
For manufacturers planning investments extending into the 2030s, the availability of allowances and the future trajectory of carbon prices influence production costs and the commercial case for decarbonisation technologies.
The European Commission reported in May that the total number of allowances in circulation during 2025 stood at approximately 1.023 billion.
Its annual market stability reserve calculation provided for approximately 190.5 million allowances to be withdrawn from auctions between September 2026 and August 2027.
These withdrawals reflect the existing mechanism for reducing market surpluses. The proposed higher invalidation threshold concerns how many allowances can subsequently remain in reserve rather than being cancelled.
The overall emissions cap will continue to decline under the legislation already governing the ETS.
Consequently, preserving a larger reserve does not remove the long-term constraint on emissions or guarantee lower carbon prices for European industry.
The agreement also concerns the established ETS covering power generation, industry and certain other sectors, rather than the separate ETS2 regime for emissions associated with road transport and buildings.
The latter has generated its own political controversy, as EU Today reported following the October European Council summit.
The Council and Parliament have agreed that the question of gradually reducing the invalidation threshold should be considered during the broader ETS review.
That exercise will address the carbon market’s operation over a longer period, when the declining supply of allowances could create tighter conditions.
The present agreement therefore provides an adjustment to the reserve mechanism without reopening the entire emissions trading framework. Following legal and technical finalisation, the provisional deal must be endorsed by both institutions and formally adopted.
The new 700 million threshold would apply after the legislation takes effect, while the larger review of the ETS continues through the EU legislative process.
The European Parliament approved €489.15 million in financial assistance for Portugal, Spain, Italy and Malta on Wednesday, 21 October, following severe storms and flooding that damaged infrastructure and disrupted communities across southern Europe during the opening months of 2026.
The allocation from the European Union Solidarity Fund was approved by 651 votes to 17, with three abstentions. Portugal will receive the largest share, approximately €261.5 million, followed by Spain with €149.1 million, Italy with €74.9 million and Malta with €3.7 million.
The funding is intended to support recovery operations and help national authorities meet the costs of restoring essential public infrastructure and services damaged by the disasters.
Portugal’s €261.5 million allocation follows flooding and storms that affected the country during January and February.
The Portuguese authorities applied for assistance from the EU Solidarity Fund after assessing the extent of the damage and the associated costs of emergency operations and infrastructure recovery.
The funds will contribute to eligible public expenditure arising from the disasters, potentially including the restoration of transport links, damaged public facilities and other essential infrastructure.
Portugal has already received approximately €65.37 million in advance funding, according to the figures accompanying the parliamentary decision.
Spain will receive €149.1 million following destructive weather during the same period, including severe flooding in February.
The Spanish government had also requested European assistance to cover part of the expenditure associated with recovery operations.
Approximately €37.26 million of Spain’s allocation has already been paid in advance.
The two countries together account for the substantial majority of the assistance approved on Wednesday, reflecting the scale of their eligible recovery costs.
Italy and Malta will receive assistance following Storm Harry, which struck parts of the central Mediterranean in January 2026.
Italy’s allocation amounts to €74.9 million, while Malta will receive €3.7 million.
The storm caused significant disruption in affected Mediterranean areas, with heavy rainfall, strong winds and damaging sea conditions placing pressure on local infrastructure.
Italian authorities sought European support for recovery operations in the affected territories, while Malta submitted its own request following the damage sustained during the storm.
The Maltese allocation includes approximately €931,000 already made available through an advance payment.
The final assistance amounts were proposed by the European Commission after examining the applications submitted by the four governments.
The Commission’s September proposal to mobilise the EU Solidarity Fund set out the amount of assistance required for each country.
The total proposed mobilisation was €489,148,220.
The European Union established the Solidarity Fund in 2002 to assist member states and certain countries participating in the EU accession process following major natural disasters.
The mechanism provides financial support for public emergency and recovery expenditure rather than operating as a general insurance scheme for individuals or businesses.
Eligible expenditure can include emergency accommodation, restoring essential infrastructure, securing protective infrastructure, cleaning disaster-affected areas and protecting cultural heritage.
National authorities submit applications to the Commission, which evaluates them against the relevant eligibility requirements and financial thresholds.
Assistance depends on the assessed disaster damage and applicable regulatory criteria, rather than simply reimbursing every euro of economic loss.
The fund is financed through EU budgetary arrangements and is mobilised following the required institutional approvals.
Payments are made to the countries concerned, which remain responsible for ensuring that assistance is used in accordance with EU financial rules.
The Solidarity Fund can therefore help governments manage exceptional recovery costs, but it does not replace national budgets, private insurance or other financial arrangements.
The latest allocation comes against a background of increasingly frequent demands on European disaster-response mechanisms.
Southern European countries have experienced damaging floods, storms, heatwaves and wildfires in recent years, leading to repeated requests for assistance.
Recovery expenditure extends beyond immediate emergency operations. Damaged roads, bridges, coastal defences, water systems and public buildings can require prolonged reconstruction.
These costs can place considerable pressure on local authorities, particularly where a disaster affects tourism, transport or economic activity.
The EU faces the additional challenge of maintaining sufficient funds to respond to major disasters affecting several countries within a relatively short period.
Extreme weather events can also expose weaknesses in existing infrastructure, prompting governments to consider whether reconstruction should incorporate additional protection against future disasters.
However, such investments must be assessed against the eligible spending categories of the Solidarity Fund and the availability of other EU financing programmes.
Wednesday’s vote represents parliamentary approval of the mobilisation proposed by the European Commission.
The decision concerns disasters that occurred earlier in 2026 and does not constitute a new emergency response operation.
The funds will support eligible recovery measures carried out by the national authorities in the four countries.
The payments already made to Portugal, Spain and Malta will be taken into account when the remaining assistance is disbursed.
EU authorities will retain responsibility for monitoring compliance with the relevant financial and reporting requirements.
The substantial parliamentary majority indicates broad support for assistance to the affected countries, although future disaster-funding arrangements will continue to depend on the resources available in the European budget.
For the four governments, the immediate task is to use the approved assistance to meet eligible recovery costs and restore damaged public infrastructure following the storms earlier this year.
Nuclear power has historically been a divisive issue: During the Cold War, an entire generation feared annihilation at the hands of the same basic technology that some want to use to power their homes.
That's unfortunate, because nuclear energy has considerable benefits—a reliable source of power with very few greenhouse gas emissions—with increasingly lower risks.
Thankfully, it seems that message is catching on with people from both major political parties.
"About six-in-ten U.S. adults now say they favor more nuclear power plants to generate electricity," Pew Research reported in October 2025. "That's up from 43% in 2020, driven by increasing support among both Republicans and Democrats." The authors noted that "Republicans are more likely than Democrats" to favor the policy, with "roughly seven-in-ten Republicans and Republican-leaning independents" expressing support, but it still included 52 percent of Democrats and independents who lean in that direction.
Gallup found similar results earlier this year. The pollster "asked whether the U.S. should put more emphasis, less emphasis or about the same emphasis as it does now on producing domestic energy from each of six sources," wrote Megan Brenan. The six sources were solar, wind, nuclear, natural gas, oil, and coal.
"Nuclear energy is the only one of the six sources to see support grow since 2021, rising seven points to 46%," Brenan added. "This shift is notable given that preferences for nuclear energy had historically been more evenly divided among responses of more, less and the same." Instead, those favoring more emphasis on nuclear power outranked both those who want less and those who wish for it to stay the same, by about 20 points each.
It seems the consensus has been building: In 2024, a poll of first-time voters in The Wall Street Journal found overwhelming support for nuclear energy as a means of fighting climate change.
The trend is welcome, and it marks a major reversal of anti-nuclear sentiment that goes back decades.
The China Syndrome, a film about a possible meltdown at a fictional California nuclear plant, premiered in the U.S. in March 1979. One character in the film warns that a meltdown could "render an area the size of Pennsylvania permanently uninhabitable, not to mention the cancer that would show up later."
Less than two weeks later, in a disastrous bit of timing, a malfunction caused a partial meltdown at the Three Mile Island nuclear power plant near Harrisburg, Pennsylvania.
Thankfully, Three Mile Island was not a disaster. "Some radioactive gas was released a couple of days after the accident, but not enough to cause any dose above background levels to local residents," according to the World Nuclear Association. "There were no injuries or adverse health effects."
But those details were lost on the public. Several recording artists formed Musicians United for Safe Energy (MUSE), an activist group that opposed nuclear power. Just six months after Three Mile Island, MUSE held a series of "No Nukes" concerts at Madison Square Garden, plus a rally in Central Park that drew nearly 200,000 attendees.
That populist support spilled over into politics, particularly among Democrats. Running for president in 1980, Sen. Ted Kennedy (D–Mass.) called for a two-year moratorium on new nuclear plants. In its national platform, the Democratic Party pledged to "retire nuclear power plants in an orderly manner."
After the Three Mile Island incident, 39 planned nuclear plants were canceled.
That's a shame, for many reasons. As Reason's Ronald Bailey wrote in 2018, in a theoretical world where the development of U.S. nuclear power continued at its previous pace, "by 2015 it would have replaced all coal-burning and three-quarters of gas-fired electric power generation….Cumulative global carbon dioxide emissions would be about 18 percent lower, and annual global carbon dioxide emissions would be one-third less."
Yet even decades later, plenty of people—again, particularly Democrats—still opposed nuclear energy.
"Of all the Democratic divides on climate," Politico wrote in 2019, "the role of nuclear power may be the biggest. Progressives and some environmental groups have long lumped it into a category with fossil fuels, and some have spent decades opposing it."
At the time, a number of people were running to be the Democratic Party's presidential candidate, and many of them had strong opinions on nuclear energy. Sen. Elizabeth Warren (D–Mass.) said that she would not license any new nuclear reactors; Sen. Bernie Sanders (I–Vt.) pledged to go one step further and not renew the licenses of any existing reactors.
But things have changed in just a few short years, and nuclear energy is now an issue with potential bipartisan support. When did this pivot take place, and why?
"It was really around 2021, 2022, I would say that things really began to shift," James Walker, CEO of Nano Nuclear Energy, tells Reason. "A lot of the popular support looks like it's coming from younger people….It is a zero-carbon-emission power, and they have been raised to [be] more climate goal-focused" than older generations.
It's not just Gen Z either: Lawmakers are more keen on nuclear power now too. Earlier this month, the MORE American Fuel Act, sponsored by Sens. Cynthia Lummis (R–Wyo.) and Mark Kelly (D–Ariz.), passed the Senate unanimously. The bill "modernizes outdated Nuclear Regulatory Commission (NRC) licensing requirements for uranium enrichment facilities and aligns them with the process already used for other nuclear facilities and reactors," according to a press release from Lummis. It also "lets enrichment companies begin construction at their own risk instead of waiting years for a construction license before breaking ground, while preserving public participation and the NRC's rigorous safety standards."
"What we've seen up in Washington is that there is a nervousness around keeping pace with AI development," Walker adds. "There is a concern that rivals that are also investing very heavily into AI, such as China, are building nuclear reactors like crazy, and one of the reasons they're doing that is just so they have baseload power that allows them to scale up their systems. They are building two gigawatt-scale nuclear power plants every year at the moment, and a lot of it is to try and catch up with the U.S. tech industry."
The post Nuclear Power Now Has Bipartisan Support appeared first on Reason Magazine.
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