Linking the Swiss emissions trading system with that of the EU is beneficial for both environmental policy and the economy. An agreement to this end between Switzerland and the EU came into force on 1.1.2020, and the two emissions trading systems have since been linked.
Switzerland and the European Union (EU) operate separate emissions trading systems (ETSs). The EU ETS includes just under 11,000 installation operators, representing emissions of around 2 billion tonnes of CO2 equivalent (CO2eq), as well as over 500 aircraft operators, which account for emissions of around 65 million tonnes of CO2. Some 50 installation operators participate in the Swiss ETS, with emissions totalling approximately 5 million tonnes of CO2eq. However, because of the small number of participants, Swiss emissions trading only has limited scope for development.
Switzerland is therefore seeking to link its ETS with the much larger EU ETS, so that Swiss ETS participants can benefit from the liquid and transparent European emissions trading market and thus enjoy greater flexibility in meeting their CO2 targets. Switzerland and the EU began negotiations to link their ETSs in 2011. The technical negotiations were concluded in January 2016 with the initialling of an Agreement. The Agreement was signed in Bern on 23 November 2017. Following its approval by the EU and by the Swiss Parliament, it was ratified by Switzerland and the EU in December 2019 and entered into force on 1 January 2020. It is the first international treaty linking emissions trading systems anywhere in the world.
Overview of the content of the Agreement
The Agreement regulates the mutual recognition of emission allowances from the two ETSs, each of which has its own legal basis. Switzerland will therefore not adopt EU law. Anyone obliged to participate in the Swiss or EU ETS can use emission allowances from both their own system and that of the other party to cover the relevant greenhouse gas emissions. In addition, as a result of the linking, aviation and fossil-thermal power plants will be integrated into the Swiss ETS, in line with the system in the EU. Participants in one ETS will be entitled to apply for admission to the auctions of emission allowances in the other ETS. Compatibility between the ETSs, the equal treatment of participants and system security are ensured by, among other things, 'essential criteria' laid down in the Annexes to the Agreement.
As with other agreements with the EU, a Joint Committee will be established to manage the Agreement. The Joint Committee may, in particular, decide on amendments to the Annexes. The Agreement is geared towards long-term cooperation and is therefore not time-limited. However, it may be terminated at any time subject to a six-month notice period. Since the Agreement is not intended to provide access to the internal market through the direct adoption of EU law, it will not fall within the scope of a future institutional agreement between Switzerland and the EU.
Implementation of the linking in Switzerland
Since the Agreement came into force in 2020, domestic and foreign aircraft operators that carry out domestic flights in Switzerland or flights from Switzerland to the European Economic Area (EEA) are obliged to participate in the Swiss ETS. Under the Agreement, flights from the EEA to Switzerland are covered by the EU ETS.
An electronic link between the Swiss Emissions Trading Registry and the European registry (Union Registry) has allowed emission allowances to be transferred between the registries since September 2020. As previously, anyone entitled under the Agreement to apply for admission to a Swiss auction and wishing to participate in such an auction will need to have an account in the Swiss Emissions Trading Registry.
ETS participants for whom it is not economically viable to meet their obligations under the ETS because recognition of European emission allowances in the Swiss ETS has been temporarily suspended in accordance with the Agreement, may submit an application for assessment as a case of hardship.
Last modification 30.12.2020