From separation to cooperation: Emissions trading systems in the EU and Switzerland

Transcription

1 Federal Department of the Environment, Transport, Energy and Communications DETEC Federal Office for the Environment FOEN From separation to cooperation: Emissions trading systems in the EU and Switzerland

2 Agenda 1. Past: The Swiss and EU ETS until Present: The revised CO 2 -Act and ETS post Future: Linking of the Swiss and EU ETS 2

3 1. Past: The Swiss and EU Emissions Trading Schemes (ETS) until

4 Emissions Trading in Switzerland (I) Switzerland already had a cap-and-trade scheme in the period Companies seeking exemption from the CO 2 levy on heating and process fuels (36 CHF/tCO 2 ) had to agree on a reduction objective and participate in the ETS. Primarily of interest for companies from energyintensive sectors like cement, glass, ceramics, pulp and paper, steel, etc. 4

5 Emissions Trading in Switzerland (II) Numbers: Almost 400 companies participated in the Swiss ETS in the first phase ( ). High amount of medium-sized companies. Total allocation: Around 3.3 mio. tco2/a. 5

6 Separation? No, rather similarity CH EU System Cap-and-trade Cap-and-trade Participation Voluntary Mandatory Reduction Coverage Absolute, with one-time growth correction All sectors, all sizes (except refineries) Absolute Defined sectors and thresholds Allocation Free Free, max. of 10% may be auctioned Offsets Yes, limited amount Yes, limited amount MRV Yes Yes Sanction Yes, levy on each tco2 emitted Yes, 100 / tco2 not covered with allowances 6

7 2. Present: The revised CO 2 Act and ETS ( ) 7

8 Revised CO 2 Act: context The revised CO 2 Act regulates the Swiss climate policy beyond 2012 and sets new targets for Overall reduction target: minus 20% compared to 1990 levels (absolute reduction of 10.5 MtCO 2 ). This reduction has to be achieved domestically. Possibility to increase the target up to minus 40%, if a satisfying international agreement can be reached at UNFCCC level. In this case, ¾ of the additional reduction could be achieved by using market mechanisms. Covers all gases of the Kyoto Protocol. 8

9 The CO 2 Act: Instruments Buildings: CO 2 levy on fossil heating fuels Earmarking of CO 2 levy for the buildings programme Technical prescriptions for buildings Transport: CO 2 emission limits for new passenger car fleet Obligation for motor fuels importers to domestically offset CO 2 emitted by the transport sector (5-40%) Industry: CO 2 levy on heating and process fuels Emissions Trading Scheme (possible linking to EU ETS) Possibility of CO 2 levy exemption for some companies 9

10 The Swiss ETS post-2012 (I) Continuation with specific amendments of the Swiss ETS to allow for a linking with the EU ETS. Mandatory cap-and-trade system with absolute emissions reduction objectives. Coverage of sectors: generally all installations with installed capacity above 20 MW as well as specific production thresholds (incl. refineries). Opt-in for installations with MW capacity. Reduction path: -1.74% per year over the scheme (starting point of the reduction path is 2010). 10

11 The Swiss ETS post-2012 (II) Allocation: partly free, based on (EU) Benchmarks. Auctioning of allowances not allocated for free. Use of offsets limited (quantity and quality). Solid MRV. Sanction: 125 CHF/tCO2 and obligation to surrender the missing allowances the following year. Numbers: Participants: installations (over in EU). Cap: around 5 mio. tco2eq. (approx. 2 bn. tco2eq in EU). 11

12 From similarity to equality CH EU System Cap-and-trade Cap-and-trade Participation Mandatory Mandatory Reduction Absolute Absolute Coverage Allocation Offsets Defined sectors and thresholds (incl. Refineries) Free up to benchmark; rest is auctioned Yes, limited amount and quality requirements MRV Yes Yes Defined sectors and thresholds Free up to benchmark; rest is auctioned Yes, limited amount and quality requirements Sanction Yes, 125 CHF / tco2 Yes, 100 / tco2 12

13 3. Future: Linking of the Swiss and EU ETS 13

14 Linking the EU and Swiss ETS: Creating a common market for allowances CH-ETS EU-ETS 14

15 Why is linking the EU and Swiss ETS a good idea? Politics: Proving the feasibility of linking trading schemes. Bilateral link as a first step towards multilateral link, towards a global carbon market. Economics: Size of the market: The bigger, the better, i.e. the more cost efficient can emission reductions take place. Competitiveness issues: Same rules and same price avoids market distortions between Swiss and EU installations. 15

16 State of negotiations Negotiations are making good progress. Objective: Finalisation of negotiations by the end of this year. One of the remaining issues is how aviation will be included into the EU ETS and subsequently into the Swiss ETS The bilateral agreement needs to pass the Swiss Parliament for the ratification process. Count approx. 1.5 years. Linking should be realistic by

17 Thank you for your attention! For further information: 17