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EU And Swiss Agree To Link Emissions Trading Schemes

by Ulrika Lomas, Tax-News.com, Brussels

26 January 2016


Switzerland and the European Union have concluded negotiations on the proposed linking of their emissions trading schemes (ETSs).

An agreement was initialled on January 25 by representatives from the Swiss Federal Office of the Environment, the Directorate for European Affairs, and the EU's Directorate-General for Climate Action. Both Switzerland and the EU operate their own ETSs and have been negotiating a proposal to link these schemes since 2011.

The EU's ETS works on the "cap and trade" principle, whereby a limit is set on the total amount of certain greenhouse gases that can be emitted by factories, power plants, and other installations. The cap is reduced over time, with the aim of reducing total emissions. Within the cap, companies receive or buy emissions allowances and, after a year, must surrender enough allowances to cover their emissions. They must purchase emissions allowances if they exceed their quota.

In Switzerland, certain companies are required to surrender emissions rights annually based on their effective greenhouse gas emissions. A similar carbon taxation to the EU's is also in place.

According to the Swiss Federal Council, the linking of national or regional ETSs can provide an effective means of combating climate change, by expanding the international Co2 market. It added that the agreement will enable companies and operators in the Swiss market to trade emissions rights on the considerably larger and more liquid European market. This will result in comparable prices for emissions in both markets and create a level playing field.

The agreement also provides for the mutual recognition of emission rights granted under the separate schemes. Aircraft operators will be brought into the Swiss ETS. In the EU, certain aircraft operators are already required to participate in the system.

TAGS: environment | tax | pollution tax | energy | aviation | environmental tax | carbon tax | Switzerland | trade | European Union (EU) | Europe

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