CO2 Act - Emissions Trading Scheme (ETS)

The Switzerland Emissions Trading System is a mandatory cap-and-trade system. The total amount of emission allowances is determined top-down and decreases annually. The ETS started in 2008 with a five-year phase during which companies could voluntarily join as an alternative to facing the Switzerland carbon tax (CO2 levy on fossil fuels). Starting from 2013, the ETS became mandatory for large energy-intensive industries and medium-sized industries could voluntarily join. Participants in the ETS continue to be exempted from the CO2 levy.
On January 1, 2020, the linking of the Swiss and EU ETS came into force.  Ratification of the agreement by the EU and Switzerland was announced on December 12, 2019 and followed legislative revisions required for the Swiss ETS to be compatible with the EU ETS and comply with the agreement. With the linking agreement now in effect, covered entities in the Switzerland ETS can use allowances from the EU ETS for compliance, and vice versa. However, the two systems run separate auctions. The revised ‘Ordinance on the Reduction of CO2 Emissions (CO2 Ordinance),’ was adopted in November 2020, which embedded the new legal base for the Swiss ETS into the partially revised “CO2 Act” – the core framework of Switzerland’s climate legislation – that entered into force in January 2021.

Source: World Bank Carbon Pricing Dashboard

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