Michael Lips Madeleine Schreiner December 18 2017 Revision of Federal Act on the Reduction of CO2 Emissions Pestalozzi Attorneys at Law | Environment & Climate Change - Switzerland Michael Lips, Madeleine Schreiner Environment & Climate Change Past developmentsMeasures under revised CO2 ActOn December 1 2017 the Federal Council published its dispatch regarding the total revision of the Federal Act on the Reduction of Carbon Dioxide (CO2) Emissions(1) (the CO2 Act) for 2021 to 2030. The parliamentary debate on the revision of the CO2 Act will start in 2018. This will define the development and course of Swiss climate policy for upcoming years.Past developmentsIn response to the growing threat of climate change for humans and the ecosystem and in order to reduce global emissions, the United Nations (UN) adopted the UN Climate Convention in 1992, the Kyoto Protocol in 1997 (including two commitment periods) and the Paris Agreement in 2015.As of December 2017, 197 countries have signed the Paris Agreement and 170 have ratified it. These signatory states must take measures as of 2021 in order to reduce greenhouse gas emissions and limit the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels (the goal being a maximum temperature increase of 1.5 degrees Celsius above pre-industrial levels).By ratifying the Paris Agreement on October 6 2017, Switzerland committed itself to reduce its greenhouse gas emissions by at least 50% by 2030 compared to 1990 levels. In order to implement the Paris Agreement into national law and establish the new objectives and measures for Switzerland for the period 2021 to 2030, the CO2 Act must be revised.Measures under revised CO2 ActThe CO2 Act focuses on the period until 2020 and aims to reduce domestic greenhouse gas emissions by 20% compared with 1990 levels (the greenhouse gas emissions of Switzerland in 1990 amounted to 53.7 tonnes of CO2 equivalent). The revised act implements the Paris Agreement and sets reduction targets for the period following 2020. By pursuing and intensifying reduction measures already implemented under the act – particularly in the traffic, real estate and industry sectors – the domestic greenhouse gas emissions within Switzerland are to be reduced by at least 30% by 2030 compared to 1990. A maximum of 20% of the reduction goal must be achieved abroad, resulting in a 60:40 ratio of domestic and foreign greenhouse gas emissions reductions. The reductions outside Switzerland will be realised by supporting and implementing climate protection projects and cooperating with other countries.To comply with its commitment to the Paris Agreement, the Federal Council intends to provide for the following measures in the revised CO2 Act:In the traffic sector, the CO2 requirements for cars will be regulated in line with the EU regulations, therefore setting an emission limit of 95 grams (g) of CO2 per kilometre (km) on new passenger cars and limiting the allowed emissions for new delivery vans and semi-trailers to 147g CO2/km. Further, the compensation duty for importers of fossil motor fuel is to be extended. Such importers will be required to compensate between 15% and 90% of traffic-related CO2 emissions, whereas at least 5% of the traffic-related CO2 emissions are to be compensated with renewable fuels. The main aim of these measures is to increase the amount of hybrid and electric vehicles and the use of renewable fuels in the traffic sector.In the real estate sector, a higher CO2 levy on fossil fuels with a maximum of Sfr210 per tonne of CO2 is to be introduced, thereby creating an incentive to reduce the use of thermal fuels and promote greater use of renewable and environmentally friendly energy sources. As the increase of the CO2 levy on fossil fuels also affects other sectors, it is considered a cross-sector measure. Additionally, a CO2 threshold for buildings is to be implemented if the CO2 emissions in this sector do not decrease by at least 50% by 2027.In the industry sector, the CO2 Act is to be revised in order to comply with the Agreement between the European Union and the Swiss Confederation on the Linking of their Greenhouse Gas Emissions Trading Systems(2) and to implement the aviation emissions and emissions of fossil fuel thermal power plants into the Swiss emissions trading system.(3) Enterprises that have to pay more than Sfr15,000 in CO2 levy per year but are not obliged to participate in the emission trading system (ie, less than 5,000 tonnes of CO2 emissions per year) may still be exempt from the obligation to pay the CO2 levy, provided that they commit to undertake their own measures in order to reduce their CO2 intensity levels.Further, the revised CO2 Act contains provisions regarding the adaptation to climate change. The average temperature in Switzerland rises twice as much as the global average. Therefore, the coordination between the state and the cantons will be reinforced when it comes to risk prevention, natural hazard events or the determination of financing requirements.By these means, Switzerland aims to tighten the CO2 Act and reinforce its contribution to the limitation of global warming to below 2 degrees Celsius above pre-industrial levels, even targeting a maximum temperature rise of 1.5 degrees Celsius. In the long term, Switzerland aims to reduce its greenhouse gas emissions by 70% to 85% by 2050 and eventually wants to achieve climate neutrality.For further information on this topic please contact Michael Lips or Madeleine Schreiner at Pestalozzi Attorneys at Law by telephone (+41 44 217 91 11) or email ([email protected] or [email protected]). The Pestalozzi Attorneys at Law website can be accessed at www.pestalozzilaw.com.Endnotes(1) The Federal Act on the Reduction of CO2 Emissions, SR 641.71.(2) Proposal for a Council Decision on the signing on behalf of the European Union of the Agreement between the European Union and the Swiss Confederation on the linking of their Greenhouse Gas Emissions Trading Systems, November 7 2017, COM (2017) 428, 2017/0194 (NLE). This agreement was signed by the parties on November 23 2017 and has yet to be ratified in order to be valid.(3) For further details please see "Major steps taken towards linking Swiss and EU emissions trading systems".