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Switzerland, EU To Link Emissions Trading Scheme

by Ulrika Lomas, Tax-News.com, Brussels

29 February 2016


At the end of January, Switzerland and the European Union concluded negotiations on a proposal to link their emissions trading schemes (ETSs).

The agreement provides for the mutual recognition of emission rights granted under the separate schemes. Aircraft operators will be brought into the Swiss ETS for the first time. In the EU, certain aircraft operators are already required to participate in the system.

An agreement was initialed on January 25 by representatives from the Swiss Federal Office of the Environment, the Directorate for European Affairs, and the EU's Directorate-General for Climate Action. Both Switzerland and the EU operate their own ETSs and have been negotiating a proposal to link these schemes since 2011.

The EU's ETS works on the "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. The 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.

In Switzerland, certain companies are required to surrender emissions rights annually based on their effective greenhouse gas emissions. A similar carbon taxation to the EU's is also in place.

TAGS: aviation

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