Overview

Description

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. On January 1, 2025, a revised CO? Act entered into force, aligning the Swiss ETS with the 2023 EU ETS 1 revisions, including adoption of the same linear reduction factors and the phase-out of free allocation for aviation by 2026.

Recent Developments

On January 1, 2025, the revised CO? Act entered into force. For stationary installations and aviation, the same linear reduction factors as in the EU ETS 1 now apply. Carbon capture and storage, and under certain conditions foreign biogas use, may now be accounted for in the ETS. Free allocation for aircraft operators is being phased out by 2026 in line with EU ETS 1 rules. From 2025, revenues from Swiss ETS auctions are earmarked to support decarbonization of ETS installations and the mitigation of aviation emissions. In November 2025, the Swiss Federal Council adopted further partial revisions to the CO2 Ordinance, effective January 1, 2026, covering additional reductions in free allocation for industrial installations and a new incentive mechanism providing free allowances to aircraft operators to partially offset the costs of sustainable aviation fuel uptake.

Coverage

The Switzerland ETS applies to GHG emissions (CO2, N2O, CH4, HFCs, NF3, SF6 and PFCs) from fuel use in the industry, power and aviation sectors and industrial process emissions.

Pricing and Allocation Approaches

Free allocation (Intensity-based), Auctioning

Compliance Approaches

Annual

Relation to Other Compliance CPIs

Switzerland's ETS has been linked with the EU ETS since January 2020. Prior to that, revisions were made to align with the EU ETS legislative framework. Covered entities in the Swiss ETS can use allowances from the EU ETS for compliance, and vice versa. The two systems run separate auctions. Market participants from the EEA need an account in the Swiss Emissions Trading Register in order to participate. Allowance transfers between the EU and Swiss registries are generally executed bi-monthly on pre-announced dates. From 2024, allowance transfers between the EU and Swiss registries are executed on a daily basis (Monday to Friday), with specific exception dates published in the Emissions Trading Registry.

Covered Sectors

Electricity and heat

Industry

Mining and extractives

Aviation