The emissions trading scheme (ETS) limits the emissions from the most greenhouse gas-intensive industrial installations. For this purpose, the absolute available quantity of emission allowances, and therefore a maximum for the emissions of all ETS participants, is defined in advance. Every ETS participant is allocated a certain quantity of emission allowances. If its emissions are lower, it can sell surplus emission allowances, in the opposite case it must buy emission allowances.
Information for affected companies
Further information about the rights and obligations of installation operators which carry out an activity subject to the emissions trading scheme can be found under “Further information” at the end of the page.
Switzerland’s emissions trading scheme
Switzerland introduced the emissions trading scheme (ETS) for industrial installations in its current form in 2013, on the basis of the EU regulation. The rules are defined in advance each time for a set period – a “trading period”. The first trading period was from 2013 to 2020. With a partial amendment to the CO2 legislation, the Swiss Parliament extended emissions trading. The next trading period covers the years 2021 to 2030. Switzerland’s ETS and that of the EU have been linked since 1 January 2020. Swiss ETS participants are therefore on a level playing field with their European competitors with regard to the regulation of greenhouse gas emissions.
Participation in the emissions trading scheme
It is compulsory for installation operators with high greenhouse gas emissions to participate in the ETS (ETS participants). Activities which generally cause high to very emissions are listed in the CO2 Ordinance (Appendix 6). Any company which carries out such an activity must participate in the Swiss emissions trading scheme. Sectors affected include cement, chemicals and pharmaceuticals, refineries, paper, district heating and steel.
If absolute emissions at a production site consistently fall below 25,000 tonnes of CO2 equivalents per year, the operator of the installations may apply for an exemption from emissions trading (“opt-out”). Separately from this, research, development and testing facilities at a site and installations whose main purpose is special waste management can be exempted from emissions trading.
It is also possible to participate voluntarily in the ETS (“opt-in”). However, certain conditions defined in the CO2 Ordinance must then be met.
Any company participating in the ETS with its installations will be reimbursed the CO2 levy on the fuels it uses, upon application.
Allocation of emission allowances
The FOEN calculates the quantity of emission rights each individual ETS participant receives free of charge from the Confederation. This allowance is determined using benchmarks. Most of the benchmarks are defined as a number of emission allowances per tonne of product or terajoule of heat used, and correspond to the emissions of a greenhouse gas-efficient production facility. The ETS participant is therefore allocated emission allowances free of charge depending on its production. The FOEN calculations also take into account the risk of relocating production abroad because of the increased costs of emissions trading (“carbon leakage”). The quantity of the allowance is independent of the actual use of energy sources or materials and therefore of the greenhouse gas efficiency of production. The incentive for ETS participants is therefore to reduce their greenhouse gas emissions so that they can either sell superfluous emission allowances or will have to buy fewer additional emission allowances.
Absolute quantity of emission allowances
The Federal Council has determined the absolute quantity of emission allowances in Switzerland’s ETS in advance, based on historical data from the years 2008-2012. One emission allowance authorises the emission of one tonne CO2 equivalent. The absolute quantity of emission allowances therefore corresponds to the maximum greenhouse gas emissions of all ETS participants and has been reduced annually by 1.74 % of the original baseline since 2010 to around 4.9 million tonnes CO2 equivalent in the year 2020. From 2021, the annual reduction is 2.2 % of the 2010 baseline.
Of the absolute quantity of these emission allowances, 95 % is available for allocation to the operators of installations participating in the ETS from the first year of a trading period onwards (2013-2020 or 2021-2030). If the sum of the calculated free-of-charge allocations exceeds this quantity, the allocation to all participants are reduced linearly by the same factor (cross-sectoral correction factor). However, the reduction target across the entire ETS is not thereby increased, since this target is determined solely by the absolute quantity and the reduction path of 1.74 %, now 2.2 %, of the initial quantity per annum.
The remaining 5 % of the absolute quantity is reserved for new ETS participants and those with significant production increases. Added to this are emission allowances which are no longer allocated because of lower levels of production or the closure of installations. Any cross-sectoral correction factor is also applied to these allocations so that all ETS participants receive equal treatment.
The FOEN auctions off unallocated emission allowances via the Swiss Emissions Trading Registry. However, if the demand for emission allowances falls sharply for economic reasons, emission allowances can be withheld and subsequently deleted.
Surrender of emission allowances for annual emissions
All ETS participants must report their annual greenhouse gas emissions to the Confederation. Because an emission allowance always corresponds to one tonne CO2 equivalent, an ETS participant always has to surrender a number of emission allowances to the Confederation which corresponds exactly to the greenhouse gases emitted in tonnes of CO2 equivalents.
The table below provides an overview of the absolute quantity of emission allowances (“cap”), the reserve and the originally calculated allocation.
|Cap||5% Reserve||95% of the cap||Calculated allocation (without CSCF)||Cross-sectoral correction factor (CSCF)|
Information über den Abschluss der 2. Handelsperiode (2013-2020) im EHS (PDF, 91 kB, 08.01.2021)(available in German or in French)
Emissionshandelssystem opt-in und opt-out (PDF, 194 kB, 16.04.2021)Information (available in German, in French or Italian)
Last modification 22.12.2020