To achieve the at least 40% EU target, the sectors covered by the ETS have to reduce their emissions by 43% compared to 2005. To this end, the overall number of emission allowances will decline at an annual rate of 2.2 % from 2021 onwards, compared to 1.74% currently. This amounts to an additional emissions reduction in the sectors covered by the ETS of some 556 million tonnes over the decade - equivalent to the annual emissions of the UK. The Market Stability Reserve (MSR) - the mechanism established by the EU to reduce the surplus of emission allowances in the carbon market and to improve the EU ETS's resilience to future shocks - will be substantially reinforced. Between 2019 and 2023, the amount of allowances put in the reserve will double to 24% of the allowances in circulation. The regular feeding rate of 12% will be restored as of 2024. As a long-term measure to improve the functioning of the EU ETS, and unless otherwise decided in the first review of the MSR in 2021, from 2023 onwards the number of allowances held in the reserve will be limited to the auction volume of the previous year. Holdings above that amount will lose their validity. The revised EU ETS Directive provides predictable, robust and fair rules to address the risk of carbon leakage. The system of free allocation will be prolonged for another decade and has been revised to focus on sectors at the highest risk of relocating their production outside of the EU. These sectors will receive 100% of their allocation for free. For less exposed sectors, free allocation is foreseen to be phased out after 2026 from a maximum of 30% to 0 at the end of phase 4 (2030). A considerable number of free allowances will be set aside for new and growing installations. This number consists of allowances that were not allocated from the total amount available for free allocation by the end of phase 3 (2020) and 200 million allowances from the MSR.