EU and Switzerland to link carbon markets

The Swiss Federal Council has approved a deal to link the carbon markets of the nation with the European Union. The Emissions Trading System (ETS) aims to reduce the amount […]

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By Priyanka Shrestha

The Swiss Federal Council has approved a deal to link the carbon markets of the nation with the European Union.

The Emissions Trading System (ETS) aims to reduce the amount of greenhouse gas emissions generated by the sectors responsible for the most emissions.

The European Commission has submitted its ratification to the EU Council for approval.

Under the agreement, the EU’s ETS will use allowances from the Swiss system and vice versa once it comes into effect – not expected before 2019.

The Swiss ETS currently includes 54 major emitters in the cement, pharmaceutical, refinery, paper, district heating and steel sectors.

Linking the two systems is expected to enable these companies to access a “bigger and more liquid market” and benefit from the same competition conditions as European firms.

The EU ETS is the largest market of its kind in the world and includes around 11,000 power plants, factories and airlines.

The Swiss ETS is based on the cap-and-trade principle, with the cap set at 5.63 million tonnes of CO2 for 2013. It is reduced by 1.74% every year, which means the cap will be 4.91 million tonnes in 2020.

As is the case in the European system, the emissions generated by aviation will also be included in the Swiss system from the entry into force of the agreement. In line with the proposed regulation in the EU, it is expected that only flights from Switzerland to other countries in the European Economic Area (EEA) and internal flights will be included.