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EU To Link ETS With Switzerland

by Ulrika Lomas, Tax-News.com, Brussels

22 December 2010


The European Union (EU) is to open negotiations with the Swiss government for a link between the EU and the Swiss greenhouse gas emissions trading systems (ETS).

This is the first time that the EU has sought a connection with an existing such scheme. Such a link, it was said, would contribute to the fight against climate change and increase economic incentives to reduce climate harming emissions. It would also complement the extension of the EU trading scheme to Norway, Liechtenstein and Iceland.

The EU ETS currently applies to over 10.000 industrial installations in energy-intensive sectors, such as electricity and heat generation, metal production and chemicals. The system covers several greenhouse gases, including carbon dioxide and methane. About half the greenhouse gases emitted annually by the EU currently fall under the scheme. From 2012, the ETS will also apply to aviation, and all flights arriving at or departing from an EU airport will be included.

The EU ETS sets a cap on the overall emissions from participants. Installations must redeem allowances commensurate to the volume of their emissions; they can trade permits so that emissions reductions can be made where they are most cost-effective. While emission allowances have been allocated free to companies so far, companies will be obliged to buy a share of their permits from 2013.

Currently, the Swiss ETS constitutes a voluntary alternative to a domestic fuel tax. It covers energy-related carbon dioxide emissions by around 400 companies. Preliminary data from the Swiss government for 2009 indicates that the scheme applies to around 6.5% of the greenhouse gases emitted by Switzerland per year. Switzerland is currently reforming its ETS so as to step up action against climate change and make it more compatible with the EU's trading system.

The green light has been given for negotiations to start between the EU and Switzerland early next year. To conclude a link to the Swiss ETS, it must be approved by both the European Parliament and the European Council.

TAGS: environment | tax | European Commission | law | aviation | environmental tax | Switzerland | regulation | European Union (EU) | Europe

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