At its meeting on 13 November 2019, the Federal Council approved the revised Ordinance on the Reduction of CO2 Emissions. This, together with the amendment to the CO2 Act adopted in March 2019 and the agreement with the EU, will enter into force on 1 January 2020. From 2020, emissions from civil aviation and fossil fuel power stations will also be included in the Swiss ETS, as is already the case in the EU. Linking the two schemes allows companies in the Swiss ETS to trade emission allowances in the larger EU emissions market.
The Swiss ETS is an important market-based instrument for climate protection. Its purpose is to reduce the greenhouse gases produced by Swiss companies with very high levels of emissions. By linking the Swiss ETS with that of the EU, Swiss companies will be able to participate in the larger and more liquid EU emissions market and benefit from the same competitive conditions as EU companies.
The linking agreement was signed with the EU on 23 November 2017. It regulates the mutual recognition of emissions rights from the two ETS systems, each with its own legal basis. Switzerland therefore does not adopt EU law. Swiss Parliament approved this agreement on 22 March 2019 and adopted the necessary changes to the CO2 Act currently in force. In order to implement these decisions, the CO2 Ordinance had to be adapted, in particular to regulate introduction of the inclusion of aviation and any fossil fuel thermal power stations in the Swiss ETS. A public consultation was held from 25 March to 2 July 2019.
The amended CO2 Ordinance will enter into force on 1 January 2020 together with the partially revised CO2 Act and the linking agreement.
The Federal Council has also approved a decision by the Joint Committee (which has been preparing for implementation since the signing of the agreement within the framework of provisional application) to update the annexes to the agreement. This is necessary in order to update the references to the legal bases of Switzerland and the EU. The decision will be adopted at the next meeting of the Joint Committee. The agreement is to be ratified by both parties by the end of the year.
In order for the linking to continue to apply after 2020, the necessary provisions are to be included in the completely revised CO2 Ordinance for the years 2021-2030. This will be based on the totally revised CO2 Act, which is currently under discussion in Parliament.