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EU Approves Linking With Swiss Emissions Trading Scheme

by Ulrika Lomas, Tax-News.com, Brussels

14 November 2017


The European Council on November 10 authorized the signing of an agreement with Switzerland to link their emissions trading systems.

According to a statement from the Council, the agreement is expected to be signed soon. It will now forward the text of the agreement to the European Parliament for its consent.

The EU's ETS operates in 31 countries – the EU's member states, plus Iceland, Liechtenstein, and Norway. It covers around 45 percent of the EU's greenhouse gas emissions and works on a 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.

Once the agreement with Switzerland takes effect, participants in the EU ETS will be able to use units from the Swiss system for compliance, and vice versa.

The emissions 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.

The EU ETS and the Swiss ETS share very similar structures and follow the same principles. The current trading period of the two systems covers 2013-2020 and also incorporates a linear reduction factor to annually decrease the quantity of allowances on the market.

The Swiss ETS currently includes around 50 major CO2 emitters.

Once the agreement between Switzerland and the EU enters into force, emissions generated by the aviation industry will be included in the Swiss system, as is currently the case under EU rules. The Swiss Federal Council expects that only flights from Switzerland to other countries in the European Economic Area and internal flights will be included.

TAGS: compliance | Iceland | aviation | Liechtenstein | Norway | Switzerland | trade | Europe

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