EU drafts plan to stop cancelling excess carbon permits, sources say

BRUSSELS, March 25 (Reuters) - The European Commission is drafting a legal proposal to stop the automatic cancellation of excess carbon permits in the EU emissions trading system, in an attempt to avoid future volatility in carbon prices, EU officials told Reuters.

The move would not cap EU ETS prices. But it would mean more spare permits are kept in the ETS's "market stability reserve", which could then be released into the market if carbon prices spike in future years.

The plans are still being negotiated inside the Commission, and could change before they are due to be published next week.