Switzerland's emissions trading system
The Swiss Emissions Trading System ( CH-EHS ) is a national system for trading and reducing greenhouse gas emissions in Switzerland . Plants with particularly high greenhouse gas emissions must participate in the system; these are mainly companies with an energy consumption of 20 MW or more. Systems of some branches of the economy with medium-high emissions can participate voluntarily. Participants are in return from the CO 2 -Abgabe liberated. In addition to the CO 2 levy and individually agreed reduction commitments, the emissions trading system is one of the instruments of Swiss climate policy and is intended to help achieve national climate protection goals and comply with international obligations under the Kyoto Protocol and the Paris Agreement .
Emission rights are allocated free of charge by the state or - to a small extent - auctioned to the participants. The number of emission rights is limited ( cap ). Each participating company must submit certificates for emission rights according to its greenhouse gas emissions every year. If a company does not have sufficient emission rights, it has to buy them from other companies. It can sell excess rights. If emission rights are scarce, the price is an incentive to reduce emissions. Trading in the priced emission rights is intended to ensure that emissions are saved where this is possible at the lowest possible cost. The quantity limit should thereby be adhered to in a cost-efficient manner.
Legal bases
The legal basis for Swiss emissions trading is the CO 2 Act , further specified in the CO 2 Ordinance. Trading started in 2008 with a first trading period until 2012 as a trial phase. For eligible participants, emissions trading was a voluntary alternative to the CO 2 levy, the main instrument of Swiss climate policy.
In 2013, the regulations were revised and participation was mandatory for companies with more than 20 MW of energy consumption. In this second trading period 2013–2020, around 33% of Swiss CO 2 emissions from fuels or around 10% of Swiss greenhouse gas emissions as a whole are recorded.
To link the emissions trading systems of the European Union (EU) and Switzerland, which will come into effect from 2020, the CO 2 Act and the CO 2 Ordinance were partially revised in 2019. Non-stationary and fossil-thermal systems, as well as some air traffic, will also be subject to Swiss emissions trading from 2020, before the start of the third trading period.
A total revision of the CO 2 law is planned for the period after 2020, with the start of the third trading period . It is to be adapted to the commitments linked to the Paris Agreement , including the national contribution to reduce greenhouse gas emissions by at least 50% compared to 1990 levels by 2030.
Allocation of certificates
Companies are allocated emission rights free of charge, insofar as this is necessary for "greenhouse gas-efficient" operation. The responsible Federal Office for the Environment (FOEN) calculates the allocation amount using a sector benchmark from the most efficient systems and using adjustment factors . From 2020, with a link between Swiss and EU emissions trading, the benchmark will be based on the 10% most efficient plants in the EU.
If the total of the allocations to the system operator exceeds the cap, a uniform reduction is made to the amount of the cap with a correction factor. A reserve of 5% of the total amount is provided for new market participants and significant capacity expansions. The rest of the emission rights that are not allocated free of charge are auctioned off by the FOEN. Companies that fear relocating production abroad receive 100% of the benchmark. In 2016, this was completely the case for 28 of the 37 companies, and for another three for some of their production facilities. Under certain conditions, companies can also have their emissions reductions achieved abroad credited in accordance with the Clean Development Mechanism (CDM) or the Joint Implementation (JI) of the Kyoto Protocol during the second trading period . This leads to an expansion of the cap. There is a limit of approx. 10% per year for existing systems.
The proceeds from auctions flow into the federal budget.
Monitoring and commercial register
The FOEN is the monitoring and checking body for reporting by companies. It uses the Swiss Emissions Trading Registry (EHR) to check whether companies have met their obligations.
Every plant operator who takes part in emissions trading must open an account in the EHR. Other natural and legal persons who want to trade in emission rights can do so. All emission rights, including emission reduction certificates from CDM and JI, are recorded in the register in the accounts of the market participants and are transferred between these accounts during a transaction.
Link with EU emissions trading
The CH-ETS was designed with a view to compatibility with the emissions trading system of the European Union (EU-ETS). In November 2017, after years of negotiations, Switzerland and the EU agreed to link their emissions trading systems ( linkage ). Cross-system trading became possible on January 1, 2020.
Participants in one trading system can, upon request, participate in the auctioning of certificates from the other system. In the case of a cross-system purchase or sale in secondary trading, the certificates are transferred between the registers of the EU and Switzerland. Emission allowances from one system are recognized in the other system if they are submitted by an emitter to fulfill his obligations. The CO 2 emissions of air traffic in Switzerland are included in trading in accordance with the rules for air traffic in the EU ETS, the other climate-damaging effects of air traffic are excluded. Flights within Switzerland and those from Switzerland to countries in the European Economic Area (EEA) are affected . Flights from the EEA to Switzerland are already covered by the EU ETS. Thermal power plants operated with fossil fuels will also be subject to emissions trading in Switzerland from 2020.
If the cap of the CH-ETS is exceeded because Swiss installation and aviation operators emit more and submit more certificates from CH and EU ETS than is provided in the Swiss system alone, the European certificates apply to the fulfillment of the Swiss reduction target according to CO 2 law. The Swiss cap is de facto increasing while that of the EU is decreasing.
A joint committee is used for information exchange and consultation. He is informed of changes in the law that affect the trading systems. The joint committee has the right to amend the annexes to the agreement between Switzerland and the EU and thus decides on essential criteria that both the Swiss and the EU ETS must meet. It may submit proposals to the two parties to amend the Articles of the Agreement. The partner's approval is required for the link with other emissions trading systems, such as a national emissions trading system in Germany.
Switzerland hopes that this link will result in lower marginal costs for reducing emissions and a level playing field in the sectors concerned. The Federal Office for the Environment expects operators of stationary systems to reduce the marginal avoidance costs by a factor of five. According to an overall economic assessment, welfare would increase by around CHF 270 million compared to a scenario without a link.
Evaluation
First and second trading period
In 2013, at the beginning of the second trading period, the cap was 5.6 million tonnes of CO 2 -eq ; it will be reduced by 1.74 percent annually and by 2.2 percent from 2021. A total of 37 companies with 55 production plants from the cement, chemical and pharmaceutical, refineries, paper, district heating and steel sectors were part of the trade. The price of an emission right for the emission of one ton of CO 2 was initially 40 francs, in 2017 it was still 7 francs and was thus close to the level of the European emissions trading system . In 2013, the cost of an emission reduction certificate from CDM and JI was one franc, well below the prices of the emission rights of the CH-ETS. Companies made ample use of this offer, which led to an increase in the cap of around 4%.
Due to an oversupply of emission rights, there was practically no emissions trading in the first trading period. The excess, non-traded emission rights were bought up by the Climate Cent Foundation with the funds of a voluntary levy on petrol and diesel and then shut down. This option has not been available since 2013.
In an evaluation from 2017, the Swiss Federal Audit Office (SFAO) found that there was hardly any trading activity between 2013 and 2016. In terms of trading volume, the CH EHS was the smallest in the world. Individual events, such as the production failure of a plant, can seriously impair the effectiveness of such a small system. A large number of emission rights allocated free of charge and low prices hardly offer any incentives to reduce emissions. In addition, there were excess emission rights due to the failure of the Tamoil refinery (the CH-EHS does not provide for any reduction in the event of failure of participants) and the inclusion of emission reduction certificates from CDM and JI. The amount of emission rights available on the market until the end of 2016 is sufficient to cover the demand until 2020. In addition, the uncertainty about a discussed link with the EU emissions trading system, hardship regulations and the transfer of unused emission rights to new obligation periods would have led to planning uncertainties in the companies involved. There were hardly any incentives to invest in lower-emission technologies.
Companies that took part in the CH-EHS and were therefore exempt from the CO 2 tax nevertheless participated in the redistribution of the income from the tax according to their share of the wage bill. This could account for up to 100% of the cost of purchasing emission rights. The SFAO therefore recommended that companies exempt from the tax should be excluded from redistribution in future.
The SFAO concluded that there was an urgent need for reform. Without linking the CH-ETS to the EU emissions trading system, it viewed the continued existence of the ETS as questionable.
Third trading period
In the third trading period from 2021, the certificate prices will align themselves with those of the EU emissions trading system; the Federal Office for the Environment expects a price range of CHF 11–93 by 2030. According to an overall assessment by the Federal Office for the Environment, total emissions from stationary systems in Switzerland will decrease the cap by 1.0 million t, including emissions avoided through the purchase of EU certificates abroad. Secondary benefits arise from innovation incentives and a reduced dependence on imports of fossil fuels. As the costs of CO 2 emissions will increasingly be charged to the polluters in the future, the damage borne by the general public will decrease.
The inclusion of aviation, which begins with the third trading period in 2020, will, according to an economic assessment by the FOEN, have only minor effects. Ticket prices would likely increase by less than 1.2%. In a scenario analysis, the Infras Institute anticipates a slowdown in demand growth of less than 1% by 2030. Accordingly, the growth in emissions would hardly be weakened, and there would be no significant steering effect desired in terms of climate policy.
Web links
- Emissions trading - website of the Federal Office for the Environment
Individual evidence
- ↑ a b Federal Office for the Environment (Ed.): Emissions Trading System EHS (= Umwelt-Vollzug . UV-1317-D). 2014 ( admin.ch ).
- ↑ Federal Act on the Reduction of CO 2 Emissions (CO 2 Act) . January 1, 2013, Chapter 4: Emissions trading and compensation ( admin.ch [accessed on December 6, 2017]).
- ^ Ordinance on the reduction of CO 2 emissions (CO 2 Ordinance) . June 15, 2017, Chapter 4: Emissions Trading System ( admin.ch [accessed on December 6, 2017]).
- ↑ a b c d e f Federal Office for the Environment (ed.): Evaluation of the steering effect of the emissions trading system . January 11, 2017 ( admin.ch [PDF; 2.1 MB ]).
- ↑ ICAP (Ed.): Emissions Trading Worldwide: Status Report 2016 . S. 33–34 ( icapcarbonaction.com [PDF; 5.3 MB ]).
- ↑ a b c Federal Office for the Environment (ed.): Partial revision of the ordinance on the reduction of CO 2 emissions (CO 2 ordinance) - explanatory report . S362-0324, November 13, 2019 ( admin.ch [PDF; 680 kB ]).
- ↑ Complete revision of the CO 2 law. Federal Office for the Environment, September 4, 2019, accessed on November 18, 2019 .
- ↑ a b c d e f g Federal Office for the Environment (Ed.): Synthesis report: Economic assessment of climate policy measures after 2020 - VOBU for the total revision of the CO 2 law after 2020 . December 1, 2017, 6 VOBU Emissions Trading System ( admin.ch [PDF; 1.4 MB ]).
- ↑ Swiss Emissions Trading Registry (EHR). Federal Office for the Environment, accessed on November 21, 2019 .
- ↑ Linking the Switzerland-EU emissions trading systems: Federal Council approves amendment of the CO2 Ordinance. Federal Office for the Environment u. a., November 13, 2019, accessed on November 18, 2019 .
- ↑ New year, new system - Switzerland links emissions trading with the EU. In: srf.ch . December 29, 2019, accessed December 30, 2019 .
- ↑ Tilman Lingner: CO2 emissions trading - What the economy does for the climate - or not. srf.ch , January 15, 2020, accessed on January 15, 2020 .
- ↑ a b 0.814.011.268 - Agreement between the Swiss Confederation and the European Union to link their respective systems for trading in greenhouse gas emissions. November 27, 2017, accessed November 18, 2019 .
- ↑ Stefan Häne and Philippe Reichen: Weird business with greenhouse gases - The prices for CO 2 fall apart and destroy the incentives for companies to invest in climate protection. The federal financial control sees an urgent need for reform . In: Tages-Anzeiger . March 23, 2017 ( tagesanzeiger.ch ).
- ↑ Christian Steiner: air Empty emissions trading . In: Neue Zürcher Zeitung . May 1, 2014 ( nzz.ch ).
- ↑ Martin Peter, Helen Lückge, Maura Killer, Markus Maibach: Effects of an EHS linking for the aviation sector - update for Switzerland . On behalf of the Federal Office for the Environment (FOEN). Zurich July 21, 2016 ( admin.ch [PDF; 729 kB ]).