Zurich, 21 March 2012
The Climate Cent Foundation has carried out a third auction round involving companies. The auction closed at 40 Swiss francs per tonne of CO2. The Climate Cent Foundation acquired 212'000 Swiss emission permits.
In January 2012, the Climate Cent Foundation committed vis-à-vis the Swiss Confederation to acquiring an additional quantity of emission credits of 5 million tonnes of CO2 in Switzerland and abroad. Overall, the Foundation is to hand over to the Swiss Confederation credits amounting to 17 million tonnes of CO2, each credit representing one verifiably reduced tonne of CO2. The Swiss Confederation will be using these credits to compensate greenhouse gas emissions generated by Switzerland above and beyond the target agreed in the Kyoto Protocol. Following this agreement, in average over the years 2008 to 2012, greenhouse gas emissions should amount to only 92% of 1990 emissions. According to estimates, emissions will reach 98% of 1990 levels, meaning that each year over 3 million tonnes of CO2 must be compensated.
In this context, the Climate Cent Foundation, in collaboration with the Energie-Agentur der Wirtschaft, carried out a third auction with companies having entered a reduction commitment vis-à-vis the Swiss Confederation with a view to exemption from the carbon tax on combustibles. In contrast to the auctions carried out in the years 2007 and 2009, participation was restricted exclusively to companies allocated emission permits within the framework of the Swiss Emission Trading System. The auction sum amounted to 10 million Swiss francs. Companies could acquire this sum at auction by offering a certain quantity of emission permits at a price ranging between 10 and 100 Swiss francs per emission permit (each permit entitling its holder to emit one tonne of CO2).
The auction closed at a price of 40 Swiss francs per emission permit. In total, at this price, 31 companies offered almost 212‘000 emission permits. This means that 8.5 million Swiss francs will be paid out. At a price of 50 Swiss francs per emission permit, the auction sum of 10 million Swiss francs would have been oversubscribed. Overall, 89 companies took part in the auction. The first two auctions had closed at a price of 70 resp. 100 Swiss francs per emission permit. It is possible that the Climate Cent Foundation will carry out one or more further auctions of the same amount; this will be decided in due time.
Press release, Federal Department of the Environment, Transport, Energy and Communications DETEC, 17 January 2012
On 17 January 2012, Federal Councillor Doris Leuthard, Head of the Federal Department of the Environment, Transport, Energy and Communications (DETEC), signed a supplemental agreement on the reduction of CO2 emissions with the Climate Cent Foundation. This agreement complements existing measures for climate protection. The combination of all policy tools should enable Switzerland to meet the targets set by the Swiss CO2 Law and the Kyoto Protocol.
If it does not take additional action, Switzerland will likely fall short of its Kyoto commitment by just under one million tonnes of CO2 per year on average over the years 2008 to 2012. According to the calculations of the Federal Office for the Environment (FOEN), this is due mainly to CO2 emissions from transport. In 2010, these were 12.9 per cent higher than in 1990. According to the CO2 Law, over this period emissions should have decreased by 8 per cent.
In order to nevertheless enable Switzerland to meet the targets set by the CO2 Law and the Kyoto Protocol, on 10 June 2011 the Swiss Federal Council mandated the DETEC to ascertain with the Climate Cent Foundation (see box 1) to what extent existing reserves of funds and unused reductions could be used towards Switzerland’s achievement of its objectives.
On 17 January 2012, the Head of the DETEC, Doris Leuthard, signed an according supplemental agreement with the Climate Cent Foundation. For the years 2008 to 2012, the Foundation is willing to contribute reductions of a further one million tonnes of CO2 per year in addition to its existing commitment. In order to reduce this total of 5 million tonnes, the Climate Cent Foundation will on the one hand buy foreign emission certificates stemming from climate protection projects in developing and emerging countries (see box 2). On the other hand, the Foundation also plans to step up measures within Switzerland.
At the signing, Federal Councillor Leuthard emphasised: "The Foundation’s readiness is further testimony to the live, successful partnership between the Confederation and the business community in the fields of climate and energy policy."
With the conclusion of this supplemental agreement, Switzerland should now be able to meet its Kyoto commitment.
Box 1
The Climate Cent
Since 1 October 2005, the Climate Cent Foundation has been levying 1.5 cent per litre of imported motor fuel; this surcharge is used to fund measures for carbon reduction in Switzerland and abroad (see box 2). The Swiss Confederation signed an agreement with the Climate Cent Foundation on 30 August 2005. In February 2009, a first supplemental agreement to the initial contract was signed. With the supplemental agreement of 17 January 2012, the Foundation declares itself willing for the second time to use its strategic reserves in the interest of meeting Kyoto targets. Overall, in three different increments, the Climate Cent Foundation contractually assures the Confederation of reductions totalling 3.4 million tonnes of CO2 per year over the target period 2008 to 2012:
(figures in million tonnes of CO2 per year)
Agreement dated 30 May 2005: total 1.8 (Switzerland 0.2 / abroad 1.6)
First addendum dated 17 February 2009: total 0.6 (Switzerland 0.2 / abroad 0.4)
Second addendum dated 17 January 2012: total 1.0 (ratio Switzerland/abroad TBC)
As an alternative to this measure carried out by the private sector, the current Swiss CO2 Law envisages the introduction of a carbon tax on motor fuels. However, since such a measure can only develop its full impact over a longer period of time, the Swiss Federal Council gave precedence to a further supplemental agreement with the Climate Cent Foundation. In order for the Foundation to be able to impute further certificates from abroad, the Swiss Federal Council must amend the Imputation Decree in the coming weeks.
The CO2 Law legally anchors the Climate Cent for the post-2012 period: however, the law does not regulate the price surcharge on motor fuels, but rather the CO2 compensation importers are asked to effect.
Box 2
Foreign certificates
The Kyoto agreement provides for international climate protection projects to yield tradable certificates. They make it possible to abate or avoid greenhouse emissions abroad through concrete projects. Such projects must achieve a measurable performance in terms of their climate impact and contribute to sustainable development in host countries, e.g. through the use of environmentally sound technologies.
Certificates enable a country to reduce greenhouse gas emissions in other countries at a lower cost than at home. Fundamentally, from a global perspective it does not matter where emissions are reduced. Nevertheless, industrialised countries must meet part of their reduction commitment with domestic measures and are only allowed to use certificates as a complementary measure (principle of supplementarity).
Box 3
Target achievement
The perspectives regarding the achievement of reduction targets set out by the Kyoto Protocol and the Swiss CO2 Law show that with the supplemental Climate Cent agreement Switzerland is roughly on target. However, uncertainty remains high; in particular, it concerns the carbon sink performance of the forest, which can only be estimated more precisely based on the data of the fourth National Forest Inventory, which will become available in the summer of 2012. According to the Kyoto road map, the definitive assessment of target achievement will only become possible in 2014, after greenhouse gas inventories for the years 2008 to 2012 have been approved by the UN Climate Secretariat. Thereafter, countries will be granted a period of 100 days in order to close possibly remaining gaps by purchasing emissions certificates.
Speaking note, Dr. David Syz, President
Overview Climate Cent Foundation
