TARGETS
Switzerland has ratified the Kyoto Protocol
to the United Nations Framework Convention
on Climate Change. Its target for reductions
of greenhouse gas (GHG) emissions between
2008 and 2012 is 8 per cent less than
its emissions levels in 1990. This works
out to be about 48.25 million tonnes
of carbon dioxide (CO2)
equivalent emissions per year throughout
this period.
EMISSIONS TRADING
Briefly, the Swiss emissions trading scheme
enables scheme participants to avoid the
CO2 tax. These measures
are discussed in greater detail below.
LEGAL FRAMEWORK
AND OPERATION
The principles and instruments of Swiss
environmental policy are formulated in the
Federal Act on the Protection of the Environment,
adopted in 1985 and revised in 1995 and
2003. This Act has been supplemented by
the Federal Act on the Reduction of CO2
Emissions (CO2 Act),
which was adopted in 1999. These two laws
provide the basis for the Swiss national
climate change policy.
FEDERAL ACT ON
THE REDUCTION OF CO2
EMISSIONS
The CO2 Act establishes
a broad framework for measures designed
to reduce CO2 emissions
and is the core element of Swiss climate
policy. It covers energy-related CO2
emissions and provides the principal legal
basis for compliance with Switzerland's
Kyoto commitments. The CO2
Act stipulates an overall reduction target
of 10 per cent by 2010 compared to
1990 levels. Apart from this overall reduction
target, emissions from heating/process fuels
are to be lowered by 15 per cent and
emissions from transport fuels by 8 per
cent.
In the first stage of implementation of the CO2 Act, priority was to be given to voluntary action to lower fossil fuel consumption. However, as periodically updated energy projections indicated in 2004 that voluntary and other CO2-related measures would not be sufficient to meet the reduction target in 2010, the Swiss Federal Council was authorized to resort to an incentive tax.
The tax rates depend on the shortfalls in meeting the sectoral targets and require the approval of Parliament. Net revenues are to be fully redistributed to the population on a per-capita basis and to businesses as a percentage of wages paid. Exemption from the tax will be granted to energy-intensive and high emitting industries which have entered into legally binding CO2 reduction commitments.
The CO2 Act also allows for the use of Kyoto Protocol flexible mechanisms supplemental to domestic action. An ordinance relating to the requirements for Clean Development and Joint Implementation mechanisms (CDM/JI) projects, certificates and supplementarily was adopted by the Federal Council in June 2005, and the National Registry has implemented and operational it by mid 2006.
Having assessed several options, the Swiss Federal Council decided on 23 March 2005 to introduce a CO2 tax from 1 January 2008, to request Parliament's approval of a tax rate of SFr12 per tonne of CO2 on heating/process fuels. The rate varies according to how emissions rise or fall against an emissions baseline figure. This baseline figure is reset annually.
Emissions Trading
As noted above, he main policy instrument
in Switzerland is the CO2
tax. However, a company may avoid paying
the tax by undertaking a legally binding
commitment to reduce its GHG emissions by
a set amount during the period 2008–2012.
PERMIT ALLOCATION
Permits are issued free of charge. Reduction
targets in absolute terms are to be calculated
using a "bottom-up" approach—a
company's potential to reduce emissions,
from a technical and economic viewpoint,
is assessed on the basis of projected production
and emissions, taking into account any CO2
reduction measures already implemented.
A simplified approach is used for small
and medium enterprises (SMEs).
Each company which has been exempted of
the CO2 tax by an
official decision receives emission allowances
or permits corresponding exactly to its
reduction target. If the company cuts its
CO2 emissions below
this target, it can sell the surplus allowances.
If it emits CO2 in
excess of its target, it can buy allowances
from other companies.
OPERATION AND
FOREIGN EMISSIONS CREDITS
Starting in 2008, emission allowances equivalent
to the amount of CO2
emitted have to be surrendered each year.
To cover excess emissions, allowances have
to be purchased on the domestic or international
markets and/or earned through emission reduction
projects abroad (that is the CDM/JI projects
noted above). As a rule, foreign certificates
may be used to cover a maximum of 8 per
cent of a particular company's target.
SMALL COMPANIES
Small companies that participate in the
Swiss scheme have no specific reduction
targets. But participating small companies
have either a specific target value for
their emissions (benchmark model) or a plan
of actions (SME model) to reduce their emissions.
Such participating companies do not receive
any emission allowances. However, they can
buy emission credits to fulfil their commitments.
PENALTIES
In the event of non-compliance, the CO2
tax is to be paid retroactively for each
tonne of CO2 emitted since exemption was
granted.