Switzerland is set to become the EU’s first linking partner. Bruno Oberle, former Director of the Swiss Federal Office for the Environment (until the end of 2015), Dominique Paravicini, Deputy Director of the Swiss Directorate for European Affairs (DEA), and Jos Delbeke, Director General of the EU’s Directorate-General for Climate Action have initialled the historic agreement, concluding five years of negotiations.

Linking means the two systems will mutually recognize each other’s emissions allowances. Once the link is operational, prices should converge resulting in a level playing field for Swiss and EU based industry. While many elements of the Swiss ETS were designed to match provisions in the EU ETS (e.g. allocation benchmarks), the Swiss ETS will now also cover aviation as a result of the negotiations. Switzerland has cited lower cost emission reductions, enhanced liquidity, clearer price formation and price stability as expected benefits from the link. 

Introduced in 2008, the Swiss ETS covers around 55 companies and 5 MtCO2e. The larger EU ETS was launched in 2005 and now covers over 11,000 entities and around 2,000 MtCO2e. Linking of the schemes is a historic step and strengthens the growing momentum behind emissions trading as a policy response to reduce GHG emissions.

For the treaty to enter into force, it must be signed and ratified by both sides. The timetable for this is open.

Find the press release from the Swiss Federal Office for the Environment here