5. Mai 2019

Emissions Trading: Switzerland and the EU to link their schemes

Emissions trading is an internationally recognized instrument of climate policy. Its goal is to reduce greenhouse gas emissions while operating according to market principles (more precisely, the «cap and trade» principle). In Switzerland, about 50 emission-intensive industrial plants participate in the emission trading system. Due to this rather low number of participants, the CO2 market only works to a limited extent and the prices are difficult to keep stable.

Switzerland and the European Union (EU) are therefore aiming to link their two emissions trad-ing schemes (ETS), which means that their emission allowances in both systems shall be mutually recognized, granting Switzerland access to a much larger CO2 market. An according linking agreement was signed in November 2017. On March 22, 2019 the Swiss Parliament approved the agreement and accepted the necessary changes to the current CO2 Act. The linking agreement is scheduled to come into force on January 1, 2020. Linking the Swiss and the EU trading schemes will bring CO2 prices into line and create a level playing field for the companies involved. Furthermore, and is already the case in the EU, civil aviation and any fossil-thermal power plants will be integrated into the Swiss ETS. As for civil aviation, the scheme is planned to cover domestic flights as well as flights from Switzerland to any country of the European Economic Area (EEA; meaning EU plus Iceland, Liechtenstein and Norway). In the future, uniform rules will thus be applicable to Switzerland and the EU as far as geographical coverage, the allocation of emission allowances and the respective caps are concerned. In order to avoid double-coverage of flights under the linked ETS, flights will be assigned to one of the two ETS according to the departure principle. As a result, only domestic flights within Switzerland or from Switzerland to the EEA will be allotted to the Swiss ETS.

The implementation of the changes resulting from linking the two schemes require an amendment to the current CO2 Ordinance. The Federal Department of the Environment, Transport, Energy and Communications (DETEC) opened the consultation phase on the partial revision of the current CO2 Ordinance, which will last until July 2, 2019.