diff --git a/modules/45_carbonprice/NDC/declarations.gms b/modules/45_carbonprice/NDC/declarations.gms
index 9f95a2102..831a385b8 100644
--- a/modules/45_carbonprice/NDC/declarations.gms
+++ b/modules/45_carbonprice/NDC/declarations.gms
@@ -17,6 +17,7 @@ p45_factorRescaleCO2TaxLtd_iter(iteration,ttot,all_regi) "Track the changes of p
 p45_taxCO2eqFirstNDCyear(all_regi)                       "CO2eq tax in p45_firstNDCyear [T$/GtC]"
 p45_taxCO2eq_bau(ttot,all_regi)                          "level of CO2 taxes in business as usual run [T$/GtC]"
 pm_NDCEmiTargetDeviation(ttot,all_regi)                  "deviation of REMIND emissions to NDC target emissions in last iteration normalized to NDC target emissions [0-1]"
+p45_iterDamping	                                         "Lower bound on the price rescaling to avoid oscillations and favour convergence, between 0.25 and 1"
 $ifthen "%cm_targetDelay%" == "prisma"
 p45_delay(all_regi)                                      "delay of NDC targets, defined per region [years]"
 $endif
diff --git a/modules/45_carbonprice/NDC/postsolve.gms b/modules/45_carbonprice/NDC/postsolve.gms
index c1fd6a7b9..fc7fb9a25 100644
--- a/modules/45_carbonprice/NDC/postsolve.gms
+++ b/modules/45_carbonprice/NDC/postsolve.gms
@@ -44,9 +44,19 @@ if(       iteration.val lt  8, p45_adjustExponent = 4;
 p45_factorRescaleCO2Tax(p45_NDCyearSet(t,regi)) =
   ( (p45_CO2eqwoLU_actual(t,regi)+0.0001)/(p45_CO2eqwoLU_goal(t,regi)+0.0001) )**p45_adjustExponent;
 
+*' Concave curve growing from 0 at iteration 0 to 1 at cm_iteration_max https://www.desmos.com/calculator/ekpauw9fxx
+p45_iterDamping =
+    1 - (1 - iteration.val / cm_iteration_max) ** 2;
+
+*' Damping factor to limit the change of the CO2 tax in each iteration, ensures convergence and prevents oscillation'    
 p45_factorRescaleCO2TaxLtd(p45_NDCyearSet(t,regi)) =
-  min(max(0.1**p45_adjustExponent, p45_factorRescaleCO2Tax(t,regi)), max(2-iteration.val/15,1.01-iteration.val/10000));
-*** use max(0.1, ...) to make sure that negative emission values cause no problem, use +0.0001 such that net zero targets cause no problem
+    min(5,
+    max(0.1,
+        1
+        + (p45_factorRescaleCO2Tax(t,regi) - 1)
+          * p45_iterDamping
+    ));
+
 
 pm_taxCO2eq(t,regi)$(t.val gt 2021 AND t.val le p45_lastNDCyear(regi)) = max(1* sm_DptCO2_2_TDpGtC,pm_taxCO2eq(t,regi) * p45_factorRescaleCO2TaxLtd(t,regi) );