The Market Stability Reserve (MSR) is a regulatory instrument that came into force at the beginning of 2019 with the aim of reducing the surplus of EUAs in the CO2 market or avoiding the creation of additional surpluses. The MSR responds to fluctuating demand for EUAs by making EUA supply more flexible.
The following diagram describes how the MSR works:

From 2023, all allowances in the MSR that exceed the auction volume of the previous year will be cancelled.