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EU, Switzerland To Link Emissions Trading Systems

by Ulrika Lomas, Tax-News.com, Brussels

27 November 2017


The EU and Switzerland have signed an agreement to link their emissions trading systems (ETSs), following seven years of talks.

Under the scheme, 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 initialled 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 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.

The agreement must now be ratified by both parties. 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.

Linking compatible emissions trading systems with each other is a long-term goal for the EU.

TAGS: compliance | Energy | tax | Iceland | Liechtenstein | Norway | carbon tax | Switzerland | European Union (EU) | Europe

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