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EU Ratifies Swiss Deal To Link Emissions Trading Schemes

by Ulrika Lomas, Tax-News.com, Brussels

24 January 2018


At its meeting on January 22, the EU Council ratified a law to link the bloc's emissions trading system (ETS) with Switzerland's. Ratification of the agreement with Switzerland concludes what has been an eight-year process for the EU.

Under the arrangement with Switzerland, participants in the EU's ETS will be able to use allowances from the Swiss system for compliance, and vice versa.

Arias Canete, the EU's Commissioner for Climate Action and Energy, said: "By creating a broader carbon market together, we are demonstrating our commitment to meeting our objectives under the Paris Agreement."

Negotiations began in 2010. A linking agreement was initialed in January 2016, but the signature and conclusion of the agreement were put on hold following a Swiss referendum on the plans. Negotiations resumed in April 2017, and by August both sides had approved the proposals. The deal was eventually signed in November 2017.

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. A single, EU-wide cap applies, and auctioning is the default method for allocating allowances.

The Swiss ETS is also based on the cap-and-trade principle. The cap is reduced by 1.74 percent every year, and will reach 4.91 million tonnes in 2020.

When both the EU and Switzerland are technically ready to connect their systems, they will formally deposit their instruments of ratification. The agreement will enter into force at the start of the year following ratification, which means that the regime will likely be hooked up from 2019.

TAGS: compliance | Energy | tax | Iceland | law | Liechtenstein | Norway | Switzerland | trade

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