Negotiations on linking of Swiss and EU emission trading schemes concluded

Press releases, 25.01.2016

Bern - Negotiations between Switzerland and the European Union (EU) on linking their emissions trading schemes have concluded. Bruno Oberle, Director of the Federal Office for the Environment (until the end of 2015), Dominique Paravicini, Deputy Director of the Directorate for European Affairs (DEA), and Jos Delbeke, Director General of the EU’s Directorate-General for Climate Action, have initialled the agreement. The expansion of the international CO2 market by linking national or regional emissions trading schemes can provide an effective means of combating climate change.

An emissions-trading scheme is a market-based climate-policy instrument. Its purpose is to induce companies to reduce their greenhouse gas emissions (see box). Both Switzerland and the EU operate their own emissions trading schemes and have been negotiating the linking of these schemes since 2011. This involves the mutual recognition of emission rights granted under the two schemes.

The linking of the schemes will also enable companies and operators in the Swiss system to trade emission rights on the considerably larger and more liquid European market. This will result in comparable prices for emission rights on both markets and create a level playing field, particularly for Swiss companies vis-à-vis their European competitors. Aircraft operators shall also be included in the Swiss emissions trading scheme. The linking of the two schemes will result in the strengthening of emission trading as an important tool in the efforts to combat global climate change.

Bruno Oberle, Director of the FOEN until the end of 2015, Dominique Paravicini, Deputy Director of the DEA, and Jos Delbeke, Director General of the EU's Directorate-General for Climate Action, have initialled the agreement. Despite various differences between Switzerland and the EU, it was possible to reach an agreement in this area.

For the treaty to enter into force, it must be signed and ratified by both sides. The timetable for this is open.

What is emission trading?

The EU's international emissions trading scheme is the oldest in the world and is currently the largest in terms of the volume of emissions involved. In Switzerland certain companies are required to surrender emission rights annually based on their effective greenhouse gas emissions. In the EU certain aircraft operators are also required to participate in the system. An emission right entitles the holder to emit one tonne greenhouse-gas equivalents (CO2-eq). The volume covered by the state-granted emission rights is overall limited and reduced annually. If the volume of greenhouse gases emitted by an operator exceed the rights it holds, it must purchase the additional emission rights on the market. Alternatively, if it is more cost-effective,  the operator can also invest in low-carbon technologies and processes. If the volume of greenhouse gases an operator emits is lower than the rights held, it can sell the surplus rights on the emissions trading market. In this way a market-based price is established for greenhouse gas emissions so they can be reduced where it is most cost-efficient to do so.

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Additional indications:

FOEN: Linking the Swiss and EU emissions trading schemes