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EU, Switzerland To Link Emissions Trading Systems

by Ulrika Lomas, Tax-news.com, Brussels

17 August 2017


The European Commission and the Swiss Federal Council have each approved proposals to link their emissions trading systems (ETSs), meaning formal signature of a new agreement could take place by the end of the year.

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

Negotiations began in 2010. A linking agreement was initialled in January 2016, but the signature and conclusion of the agreement were put on hold following a Swiss referendum on the proposals. Negotiations resumed in April 2017.

The European Commission's proposal for the signature of the agreement and for its ratification will now be discussed by the EU's Council of Ministers. Ratification must be approved by both the EU and Swiss parliaments.

The two sides are hopeful that the agreement could be signed before the end of the year. The agreement would enter into force at the start of the year that follows ratification by both sides.

EU Climate Action and Energy Commissioner Miguel Arias Canete said: "After much hard work on both sides, I am proud of the progress we have made with our Swiss colleagues. As the world's largest cap and trade system, we have always aimed to promote the growth of the international carbon market."

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 currently includes 54 major CO2 emitters. It 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.

Once the agreement 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: environment | compliance | Energy | tax | European Commission | Iceland | aviation | Liechtenstein | Norway | Switzerland | trade | Europe

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