How much is the Emissions Trading System (ETS) helping to reduce Switzerland's greenhouse gas emissions? How do the incentives affect participating companies? INFRAS was commissioned by the Swiss government to conduct a comprehensive evaluation of this pillar of Swiss climate policy.
The Emissions Trading System (ETS) is an essential part of Switzerland's climate policy. It aims to reduce greenhouse gas emissions from energy-intensive industries. Since 2013, it has set a cap on emissions and made emission allowances tradable.
On behalf of the Federal Office for the Environment (FOEN), INFRAS conducted an evaluation of the Swiss Emissions Trading System. The evaluation serves to fulfill the Federal Council's reporting obligation under the CO2 Act on the effects of the ETS to date and its further development.
ETS has had little impact on emissions reductions to date
The study concludes that the ETS has functioned well from a technical and operational point of view during the period from 2013 to 2023. In particular, the emissions cap has been respected.
Greenhouse gas emissions from plants participating in the EHS have been reduced by an average of 3 percent per year. However, only a small proportion of this reduction can be directly attributed to the EHS. Changes in production and other economic factors were more important. As a result of these developments, allowance prices were too low until 2020 to provide a strong incentive for additional emission reductions. Nevertheless, the evaluation does not suggest that the fundamental effectiveness of the emissions trading system is in doubt.
Potential for improvement and recommendations for action identified
The evaluation also shows the potential for the now more stringent ETS to have a greater impact in the future. It also addresses the trade-off between the effectiveness of the ETS and the competitiveness of industry (avoiding carbon leakage), as well as many other issues.
The report also makes recommendations for the further development of the ETS. These relate to the regulatory framework, in particular to ensure that the ETS works and can be implemented in the long term, taking into account capital-intensive measures and approaches such as carbon capture and storage (CCS) and negative emission technologies (NET).
Further information:
- Final Report (Part A, in German)
- Materials Report (Part B, in German)
- FOEN dossier on the emissions trading system (ETS)
Further INFRAS articles on similar topics:
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