Europe’s Parliament has approved a plan to start reform of its Emissions Trading System (ETS) in 2019.

Of the MEPs voting on Wednesday, 495 were in favour, 158 were against and 49 abstained. The plan will now become law once it is signed off by member states.  

A Market Stability Reserve (MSR), designed to reduce the carbon credit surplus that has depressed prices under the ETS, will be set up under the plan. Up to 1.6 billion credits could be removed from the market, with the option to release them again if demand improves.

The current carbon price of around €7.50/tonne remained largely unchanged after the vote, which had been expected. Prices could now be set to rise to at least €20/tonne by 2020.

Some MEPs and industry insiders were critical of the reform plan. Germany’s Energy-Intensive Industries (EID) trade group said Europe “has set the wrong course” with the MSR decision. According to EID spokesman Utz Tillmann, the measure “does not help cut emissions; it merely leads to a politically demanded cost increase in the system. With the MSR the EU wants to steer the amounts of CO2 allowances in the market,” he added.

But Ivo Belet, a spokesman for the European People’s Party, reportedly said the reform strengthened the EU’s credibility going into December’s climate summit in Paris. And Gerben-Jan Gerbrandy, a Dutch member of the Alliance of Liberals and Democrats for Europe, was quoted as saying: “Today’s vote truly strengthens the carbon market and will gradually put an end to the surpluses that have paralyzed the carbon market.”  

The European Commission is set to propose further changes to the ETS as soon as next week.