Bern, 16.08.2017 - Switzerland and the European Union are preparing to link their emissions trading systems. The Federal Council approved the signing of the corresponding agreement at its meeting of 16 August 2017. The European Commission has also adopted proposals for the signature and ratification of the agreement and has submitted them to the Council of the European Union for approval. The agreement could be signed before the end of this year. Its ratification must then be approved by the Swiss and European parliaments.
The Emissions Trading System (ETS) is an important climate policy instrument. It aims to reduce the amount of greenhouse gas emissions generated by the sectors responsible for most emissions. The Swiss ETS currently includes 54 major CO2 emitters (see box below). The linking of the Swiss and European systems will enable these companies to access a bigger and more liquid market and benefit from the same competition conditions as European companies. As is the case in the European system today, the emissions generated by aviation will also be included in the Swiss system from the entry into force of the agreement. In line with the proposed regulation in the EU, it is expected that only flights from Switzerland to other countries in the European Economic Area (EEA) and internal flights will be included.
The changes necessary to the current CO2 Act were submitted for consultation in the context of Switzerland’s future climate policy at the end of August 2016. There was broad support for the agreement on the linking of the Swiss and European systems, however the inclusion of aviation emissions in the Swiss system was criticised by some participants.
The agreement between Switzerland and the EU has been technically finalised over one year ago. Following the implementation of the «Stop Mass Immigration» initiative and a meeting between President Doris Leuthard and European Commission President Jean-Claude Junker in April 2017 the work on negotiations that had been put on hold was resumed. The signature of the agreement between the EU and Switzerland represents an important step towards the linking of the two systems (see also European Commission press release of 16.8.2017). The Federal Council approved the signing of the agreement at its meeting of 16 August 2017. The agreement could be signed by the end of this year. It will be signed on behalf of Switzerland by the President of the Swiss Confederation, Doris Leuthard, following the consultation of the responsible parliamentary committees and in accordance with the decision of the Federal Council. The Swiss and European parliaments must then authorise the ratification of the agreement. To this end, a parliamentary dispatch on the approval of the agreement and the necessary partial revision of the CO2 Act will be submitted to the Swiss Parliament.
The Swiss emissions trading system
The Swiss emissions trading system (ETS) covers 54 companies in the cement, pharmaceutical, refinery, paper, district heating and steel sectors that generate very large volumes of CO2 emissions.
The Swiss ETS is based on the "cap-and-trade" principle which sets a maximum amount of emissions that can be emitted (cap). The cap was set at 5.63 million tonnes of CO2 for 2013. It is reduced by 1.74% every year, based on the amount defined for 2010. The cap will be 4.91 million tonnes in 2020, giving a reduction of 13% compared to 2013. The emission allowances necessary to allow the companies to operate effectively in terms of the emission of greenhouse gases, which are calculated on the basis of reference installations, are allocated each year free of charge to the companies participating in the ETS. Companies that achieve greater reductions in their emissions can sell their unused emission allowances and companies that need more emission allowances can purchase them (trade). The companies included in the ETS are exempt from the CO2 levy.