Swiss miss out on EU trade in CO2 emissions

Switzerland wants to reduce CO2 emissions by ten per cent by 2010 Keystone

The European Union has given the green light for trading in carbon dioxide (CO2) emissions, entitling firms to “pollute” for a price.

However, widespread trading in emissions in Switzerland is not expected until 2008 at the earliest.

From January 2005 more than 10,000 steel and power plants, oil refineries, paper mills, glass and cement installations across the EU will face caps on their emissions of CO2.

Companies that manage to reduce emissions to below the set limit will be able to sell the difference to those unable to meet the targets.

Swiss subsidiaries of companies from the EU can also participate in this trade.

Market analysts have predicted that trading among the 10,000 plants affected – which account for 46 per cent of EU emissions – could be worth more than €7 billion (SFr10.8 billion) a year by 2007.

The Swiss government says it is keen to participate in the trading system which will cover the 25 member states of the enlarged European Union. Officials have already established informal contacts with EU counterparts.

“We are interested in tying the Swiss system to the EU system,” Renato Marioni from the State Secretariat for Economic Affairs (Seco) told swissinfo.

Trading platform

Yvan Keckeis, national climate secretary at the Swiss environment ministry, said plans for a similar emissions trading platform in Switzerland were already underway.

“We are also establishing our own national emissions trade systems. Currently negotiations with approximately 600 firms are in process to decide the goals for the reduction of CO2 for the years 2008 to 2012,” said Keckeis.

However, Jürg Grütter from the Energy Agency for Industry (EAI) considers it unrealistic for Swiss firms to be involved in the emissions trade before 2008.

“Companies in the EU must already adhere to certain goals, but Swiss firms only in 2008,” he said.

And not everyone is enthusiastic about a trade in emission credits.

According to Cyrill Studer from Greenpeace, the trade will favour industrialised nations and not developing countries who are likely to bear the brunt of climate change.

“It needs more than just pushing a few credits around,” he said.

Kyoto Protocol

The trade in emission credits forms part of the United Nations’ Kyoto Protocol, which obliges signatory states to reduce damaging greenhouse gas emissions to pre-1990 levels. CO2 emissions account for around 80 per cent of all greenhouse gases.

Switzerland set its own target in 1999 with a new CO2 law aiming to reduce levels by ten per cent by 2010.

But, according to a recent report by the Federal Institute of Technology in Zurich, Switzerland is a long way from achieving this goal.

Without additional measures, emissions will sink by only 1.3 per cent by 2010, says the study.

In a further effort to tackle greenhouse gas emissions, the Swiss government has negotiated “pollution credits” with Bulgaria.

In June Switzerland agreed to invest in modernising out-dated Bulgarian power stations in return for pollution credits under the Kyoto Protocol.

Pollution credits

Martin Enderlin, a spokesman for Seco, said negotiations on a similar deals were underway with the Romanian government and a third country.

Another option for speeding up the process of reducing emissions in Switzerland would be the introduction of a tax on CO2 emissions from 2005, set at SFr50 per ton.

The cabinet is due to make a decision on whether to introduce the CO2 tax at the beginning of 2004. It would then need the approval of parliament.

“We have known for years that voluntary agreements without a certain amount of pressure are worthless,” said the EAI’s Jürg Grütter.

“But the tax is politically controversial. Interest groups such as the oil lobby are trying to sabotage the CO2 tax.”

swissinfo, Elvira Wiegers

In brief

According to the World Bank, between 1996 and 2002 credits for over 200 million tons of emissions have already been traded worldwide.

In Europe a ton of greenhouse gas should cost, as of 2005, less than €7. At the moment the price is between $4 and $5 per ton, according to the EAI.

The UN Environmental Programme estimates that the long-term market potential of trade with emissions credits is about $2 trillion.