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Federal Department of Economic Affairs FDEA
State Secretariat for Economic Affairs SECO
Economic Policy Directorate
Environment and Energy Policy
Swiss Climate and Energy Policy
after Cancún
from an Economic Policy Perspective
Thomas Roth
14 December 2010
Climate change policy – only about
greenhouse-gas emissions?
Swiss Climate and Energy Policy
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Or: Does climate change policy include
other issues? Poverty, development …
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Outline
1) The complexity of the global climate challenge
2) Where we are after Cancún
3) Swiss post 2012 climate policy
4) Other climate change relevant policies
5) Concluding remarks
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1) Global Climate Challenge
Ecological Dimension:
abatement
• human activity contributes to global
warming (see IPCC AR4)
• emissions are increasing (see IEA)
• global market failure requires a global
policy response
(“tragedy of the commons”)
• global warming would have significant
negative impacts for the world
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1) Global Climate Challenge
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1) Global Climate Challenge
• Economic Dimension:
abatement
• cost-effectiveness of climate change
mitigation
• innovation and diffusion of low carbon
technologies
costs
• competitiveness / carbon leakage
• policy risks: stable, predictable and
reliable policy framework needed
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1) Global Climate Challenge
• Social Dimension:
abatement
• conflicting targets between mitigation
and development
• higher mitigation costs in carbon
intensive economies and fossil fuel
exporting countries
costs
burden-sharing
• burden sharing needed to overcome the
global market failure
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Costs of mitigation policies
OECD (2009)
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Costs of mitigation policies
OECD (2009)
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2) Where we are after Cancún
abatement :
abatement
• 2°C target
• no legally binding emission targets post-2012
so far
costs:
• looming legal gap and still unpredictable
policy after 2012
• “green growth”/“green economy”
costs
burden-sharing
burden-sharing:
• Bali Action Plan
• “Cancún Adaptation Framework”
• “Green Climate Fund” and 100 billion target
in 2020
• “Technology Mechanism” and “Technology
Executive Committee”
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3) Swiss post 2012 climate policy
2020 emission reduction targets (relative to 1990 level):
• Federal Council (CO2-law revision):
• - 20% unilateral / - 30% conditional (comparable to EU targets)
• minimum 50% domestic abatement (“supplementarity”)
• Climate Initiative "Für ein gesundes Klima“:
• - 30%
• 100% domestic abatement
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3) Swiss post 2012 climate policy
2020 emission reduction targets (relative to 1990 level):
• Federal Council (CO2-law revision):
• - 20% unilateral / - 30% conditional (comparable to EU targets)
• minimum 50% domestic abatement (“supplementarity”)
• Climate Initiative "Für ein gesundes Klima“:
• - 30%
• 100% domestic abatement
Federal Council
Climate Initiative
abatement
costs
burden sharing
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3) Swiss post 2012 climate policy
Mitigation costs in the year 2020:
-20% target
(50% domestic)
-30% target
(50% domestic)
-30% target
(100% domestic)
GDP losses in
2020
-0,21 / - 0,40%
-0,26 / -0,65%
-1,98 / -2,08%
Welfare losses in
2020
-0,31 / - 0,56%
-0,51 / -0,62%
-1,10 / -1,17%
rates of CO2 tax
( = marginal
abatement costs)
59 /113 CHF/t
181 / 214 CHF/t
325 CHF/t
Sources:
Ecoplan (Müller, André; van Nieuwkoop, Renger), 2009
EPFL (Sceia, André; Thalmann, Philippe; Vielle, Marc), 2009
see: www.bafu.admin.ch
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
1) CO2 Levy for Heating and Process Fuels:
• Currently applied rate: CHF 36 per ton CO2
(~ CHF 0.09 per liter oil)
• rate is to increase depending on sub-target of – 25% for
heating and process fuels by 2020
• maximum rate is proposed at CHF 120 per ton CO2
• revenues are refunded to the Swiss population (lump sum per
capita) and to the business community in proportion of wages
paid
• CHF 200 million are earmarked for mitigation measures in the
building sector (building refurbishment program)
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
2) Building Refurbishment Program:
• subsidy program for refurbishment of buildings, upgrade of
heating systems, and use of renewable energies
• financed by earmarked proceeds of the CO2 levy
(CHF 200 million/year) and co-financing by the Cantons
• limited in time: 2010 - 2019
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
3) Emissions Trading System (ETS) for Industry Sectors:
• currently voluntary participation as an alternative to the CO2
levy
• bottom-up approach in allocation emission rights
• ex-post adjustments of emission rights (dynamic cap)
• government proposed mandatory participation for certain
industries
• Switzerland and EU are negotiating a linking of CH-ETS and
EU-ETS
• the international air transport sector is discussed to be included
in the linked ETS by this agreement.
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
4) Compensation of Transport Emissions:
• 2005 – 2012: private “Climate Cent” initiative by Swiss industry
(domestic compensation and abroad within Kyoto-CDM)
• 2013 - 2020: replacement by a legal obligation for transport fuel
importers to compensate a certain amount of the transport
emissions.
• the Federal Council proposed to compensate at least 25% of
the transport emissions.
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
5) CO2-levy on Transport Fuels:
• subsidiary CO2-levy on transport fuels
• to be introduced if the other measures do not comply with the
emissions reduction targets.
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3) Swiss post 2012 climate policy
Measures proposed by the Federal Council:
6) Emission performance standards for new passenger cars:
• average performance standard of 130g CO2/KM for new cars
• The target applies to the average of the fleet of each importing
company (pooling)
• Companies not complying with the standard have to pay a
penalty
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3) Swiss post 2012 climate policy
Measures in the CO2 legislation proposed by the Government
CO2-levy on heating
fuels
building refurbishment
program
ETS for industry
emissions
compensation of
transport emissions
subsidiary CO2-levy on
transport fuels
performance standards
for new passenger cars
abatement
costs
burden sharing
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3) Swiss post 2012 climate policy
Business as usual
Expected emissions abatement by 2020
Brennstoffe BAU
1.7
Industrie BAU
1.1
Treibstoffe BAU
- 1.4
Massnahmen Inland
Übrige Gase BAU
0.5
Gebäudeprogramm
2.2
Brennstoffabgabe
1.2
Industrie ETS
0.8
PW-Vorschriften
1.5
Übrige Gase Massn.
Ausland
0.1
Kompensationspflicht
Mio. tCO2eq/Jahr
3.7
40
42
44
- 7%
46
48
- 11%
50
52
54
- 4%
1990
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4) Other policies
Energy policy:
• Feed-in-tariffs for electricity from renewable energy sources
(hydro, wind, solar etc.)
• Government tender system for energy efficiency projects
(wettbewerbliche Ausschreibungen)
• Both measures are financed by an electricity grid surcharge
currently amounting to 250 million CHF per year (2010)
• Energy efficiency standards
(e.g. light bulbs or “Minergie”)
• Energy efficiency labeling (Energieettikette)
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4) Other policies
Fiscal and Transport Policies:
• Petroleum tax (Mineralölsteuer): fiscal tax
• approx. 75 cents per liter transport fuels,
• represents 8.5% of total federal revenue in 2009
• Performance related heavy vehical fee (LSVA): aims to foster a
shift from road to rail from transalpine freight transport. The fee
relates to:
• distance travelled in Switzerland
• gross weight
• pollutants according to EURO classes
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4) Other policies
Development and Co-operation:
• Important track record of Swiss development and cooperation
activities in the field of climate change mitigation and adaptation
(SDC and SECO)
• CHF 140 Mio. additional budget funds in 2010 – 2012 for climate
related development and cooperation
(complying with the Copenhagen Accord’s fast-start finance
commitment)
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5) Concluding remarks
• The global climate change problem requires a global response.
• Unresolved burden-sharing negotiations on the international level
put at risk an effective international climate regime after 2012.
• Swiss climate change policy strikes a balance between domestic
and international emissions mitigation.
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