AGREEMENT
between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems
CHAPTER I
GENERAL PROVISIONS
Article 1
Objective
Article 2
Essential Criteria
CHAPTER II
TECHNICAL PROVISIONS
Article 3
Registries
Article 4
Emission allowances and accounting
Article 5
Auctioning
CHAPTER III
AVIATION
Article 6
Inclusion of aviation activities
Article 7
Review of this Agreement in the case of changes concerning aviation activities
CHAPTER IV
SENSITIVE INFORMATION AND SECURITY
Article 8
Sensitive information
Article 9
Sensitivity levels
CHAPTER V
DEVELOPMENT OF LEGISLATION
Article 10
Development of legislation
Article 11
Coordination
CHAPTER VI
JOINT COMMITTEE
Article 12
Composition and functioning of the Joint Committee
Article 13
Functions of the Joint Committee
CHAPTER VII
DISPUTE SETTLEMENT
Article 14
Dispute Settlement
CHAPTER VIII
SUSPENSION AND TERMINATION
Article 15
Suspension of Article 4(1)
Article 16
Termination
CHAPTER IX
FINAL PROVISIONS
Article 17
Implementation
Article 18
Linking with Third Parties
Article 19
Annexes
Article 20
Languages
Article 21
Ratification and Entry into Force
Article 22
Provisional application
ANNEX I
ESSENTIAL CRITERIA
A. Essential Criteria for Stationary Installations
Essential Criteria |
In the EU ETS |
In the ETS of Switzerland |
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Mandatory nature of the participation in the ETS |
Participation in the ETS shall be mandatory for the installations carrying out the activities and emitting the greenhouse gases (‘GHG’) listed below. |
Participation in the ETS shall be mandatory for the installations carrying out the activities and emitting the GHG listed below. |
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The ETS shall cover at least the activities set out in: |
Annex I to Directive 2003/87/EC, as in force on the date of signature of this Agreement |
Article 40, paragraph 1, and Annex 6 of the CO2 Ordinance, as in force on the date of signature of this Agreement |
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The ETS shall cover at least the GHGs set out in: |
Annex II to Directive 2003/87/EC, as in force on the date of signature of this Agreement |
Article 1, paragraph 1, of the CO2 Ordinance, as in force on the date of signature of this Agreement |
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A cap shall be set for the ETS, which is at least as stringent as the one in: |
Directive 2003/87/EC as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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The level of ambition of the ETS shall be at least as stringent as the one in: |
Articles 9 and 9a of Directive 2003/87/EC, as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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The qualitative limits for international credits shall be at least as stringent as those set out in: |
as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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The quantitative limits for international credits shall be at least as stringent as those set out in: |
as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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Free allocation shall be calculated on the basis of benchmarks and adjustment factors. A maximum of five percent of the quantity of allowances over the period from 2013 to 2020 shall be set aside for new entrants. Allowances which are not allocated free of charge shall be auctioned. To this end, the ETS shall meet at least: |
as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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The ETS shall provide for penalties in the same circumstances and of the same magnitude as set out in: |
Article 16 of Directive 2003/87/EC, as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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Monitoring and reporting in the ETS shall at least be as stringent as in: |
as in force on the date of signature of this Agreement |
as in force on the date of signature of this Agreement |
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Verification and accreditation in the ETS shall at least be as stringent as in: |
as in force on the date of signature of this Agreement |
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B. Essential criteria for Aviation
Essential criteria |
For the EU |
For Switzerland |
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Mandatory nature of the participation in the ETS |
Participation in the ETS shall be mandatory for aviation activities in accordance with the criteria listed below. |
Participation in the ETS shall be mandatory for aviation activities in accordance with the criteria listed below. |
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Coverage of aviation activities and GHG and attribution of flights and their respective emissions according to the departing flight principle as set out in: |
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The CO2 Act and the CO2 Ordinance as in force on the date of entry into force of this Agreement: 1. Scope of coverage Flights which arrive at or depart from an aerodrome situated in the territory of Switzerland, except flights which depart from an aerodrome situated in the EEA. Any temporary derogations as regards the scope of the ETS, such as derogations in the sense of Article 28a of Directive 2003/87/EC, may apply in the ETS of Switzerland in accordance with those introduced in the EU ETS. Only CO2 emissions shall be covered for aviation activities. 2. Limitations of coverage General coverage mentioned in point 1 shall not include:
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Exchange of relevant data regarding the application of the limitations of coverage of aviation activities |
The two parties shall cooperate regarding the application of the limitations of coverage in the ETS of Switzerland and the EU ETS for commercial and non-commercial operators according to this Annex. In particular, both parties shall ensure the timely transfer of all relevant data to enable correct identification of the flights and aircraft operators that are covered by the ETS of Switzerland and the EU ETS. |
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Cap (total quantity of allowances to be allocated to aircraft operators) |
Article 3c of Directive 2003/87/EC. |
The cap shall reflect a similar level of stringency as the one in the EU ETS, in particular with regard to the reduction percentage rate between years and trading periods. The allowances in the cap shall be allocated as follows:
This distribution may be reviewed in accordance with Articles 6 and 7 of this Agreement. Up to 2020, the quantity of allowances within the cap shall be calculated bottom-up on the basis of the allowances to be allocated free of charge in accordance with the cap distribution as mentioned above. Any temporary derogations as regards the scope of the ETS shall require the corresponding proportional adjustments to the amounts to be allocated. As of 2021, the quantity of allowances within the cap shall be determined by the cap in 2020, taking into account a possible reduction percentage rate in accordance with the EU ETS. |
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Allocation of allowances for aviation through auctioning of allowances |
Article 3d of Directive 2003/87/EC. |
Swiss emission allowances to be auctioned shall be auctioned by the Swiss competent authority. Switzerland is entitled to the revenues generated from the auctioning of Swiss allowances. |
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Special reserve for certain aircraft operators |
Article 3f of Directive 2003/87/EC. |
Allowances shall be set aside in a special reserve for new entrants and fast growers, except that up to 2020, given that the reference year for the acquisition of data for Swiss aviation activities shall be 2018, Switzerland will not have a special reserve. |
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Benchmark for free allocation of allowances to aircraft operators |
Article 3e of Directive 2003/87/EC. |
The benchmark shall be no higher than the one in the EU ETS. Up to 2020, the annual benchmark shall be 0,000642186914222035 allowances per tonne-kilometre. |
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Free allocation of emission allowances for aircraft operators |
Article 3e of Directive 2003/87/EC. Adjustments shall be made pursuant to Article 25a of Directive 2003/87/EC, to the issuance of allowances in proportion to the corresponding reporting and surrendering obligations resulting from the actual coverage under the EU ETS of flights between the EEA and Switzerland. |
The number of emission allowances allocated free of charge to aircraft operators is calculated by multiplying its reported tonne-kilometre data performed in the reference year with the applicable benchmark. |
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The qualitative limits for international credits shall be at least as stringent as those set out in: |
Articles 11a and 11b of Directive 2003/87/EC, and Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011. |
as in force on the date of entry into force of this Agreement. |
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Quantitative limits for the use of international credits |
Article 11a of Directive 2003/87/EC. |
The use shall be 1,5 % of verified emissions up to 2020. |
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Acquisition of tonne-kilometre data for reference year |
Article 3e of Directive 2003/87/EC. |
Without prejudice to the provision below, the acquisition of tonne-kilometre data shall be done at the same time and using the same approach as the acquisition of tonne-kilometre data for the EU ETS. Up to 2020 and in accordance with the Ordinance on the Acquisition of Data on Tonne-Kilometres performed by Aircraft Operators as in force on the date of entry into force of this Agreement, the reference year for the acquisition of data for Swiss aviation activities shall be 2018. |
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Monitoring and reporting |
as in force on the date of signature of this Agreement |
Monitoring and reporting provisions shall reflect the same level of stringency as in the EU ETS. |
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Verification and accreditation |
as in force on the date of signature of this Agreement |
Verification and accreditation provisions shall reflect the same level of stringency as in the EU ETS. |
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Administration |
The criteria laid down in Article 18a of Directive 2003/87/EC shall apply. To this effect and pursuant to Article 25a of Directive 2003/87/EC, Switzerland shall be considered as an Administering Member State as regards the attribution of the administration of aircraft operators to Switzerland and EU (EEA) Member States. Pursuant to Article 25a of Directive 2003/87/EC, the competent authorities of the EU (EEA) Member States shall be responsible for all the tasks related to the administration of aircraft operators attributed to them, including the tasks relating to the ETS of Switzerland (e.g. the reception of verified emission reports covering both EU and Swiss aviation activities, the allocation and issuance and transfer of allowances, compliance and enforcement, etc.). The European Commission shall agree bilaterally with the Swiss competent authorities on handing over the relevant documentation and information. In particular, the European Commission shall ensure the transfer to the Swiss competent authorities pursuant to Article 25a of Directive 2003/87/EC, of the amount of EU allowances needed for the free allocation of aircraft operators administered by Switzerland. In case of a bilateral agreement regarding the administration of flights operating in relation to the EuroAirport Basel-Mulhouse-Freiburg not involving any amendment to Directive 2003/87/EU, the European Commission shall, as appropriate, facilitate the implementation of this agreement, provided that this does not result in double counting. |
In accordance with the CO2 Ordinance as in force on the date of entry into force of this Agreement, Switzerland shall be responsible for the administration of aircraft operators:
Swiss competent authorities shall be responsible for all the tasks related to the administration of aircraft operators attributed to Switzerland, including the tasks relating to the EU ETS (e.g. the reception of verified emission reports covering both EU and Swiss aviation activities, the allocation and issuance and transfer of allowances, compliance and enforcement, etc.). The Swiss competent authorities shall agree bilaterally with the European Commission on handing over the relevant documentation and information. In particular, the Swiss competent authorities shall transfer to EU competent authorities the amount of Swiss allowances needed for the free allocation of aircraft operators administered by the EU (EEA) Member States. |
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Legal enforcement |
Parties shall enforce the provisions of their respective ETS in relation to aircraft operators that do not fulfil the obligations in the respective ETS, regardless of whether the operator is administered by an EU (EEA) competent authority or a Swiss competent authority, in case enforcement by the authority administering the operator requires additional action. |
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Administrative attribution of aircraft operators |
Pursuant to Article 25a of Directive 2003/87/EC, the aircraft operator's list published by the European Commission in accordance with Article 18a(3) of Directive 2003/87/EC shall specify the administering State, including Switzerland, for each aircraft operator. Aircraft operators attributed to Switzerland for the first time after the entry into force of this Agreement shall be administered by Switzerland after 30 April of the year of attribution and before 1 August of the year of attribution. The two parties shall cooperate on sharing relevant documentation and information. The attribution of an aircraft operator shall not affect the coverage of that aircraft operator by the respective ETS (i.e., an operator covered by the EU ETS that is administered by the Swiss competent authority shall have the same level of obligations under the EU ETS alongside its coverage under the ETS of Switzerland, and vice versa). |
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Modalities for implementation |
Any further modalities needed for the organization of the work and cooperation within the one-stop-shop for aviation account holders shall be developed and adopted by the Joint Committee after signature of this Agreement, in accordance with Articles 12, 13 and 22 of this Agreement. These modalities shall start applying at the same time as this Agreement. |
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Assistance from Eurocontrol |
For the aviation part of this Agreement, the European Commission shall include Switzerland within the mandate given to Eurocontrol in relation to the EU ETS. |
C. Essential Criteria for Registries
Essential Criteria
Essential Criteria
D. Essential Criteria for Auctioning Platforms and Auction Activities
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Essential Criteria |
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1 |
The entity conducting the auction shall be selected through a process which ensures transparency, proportionality, equal treatment, non-discrimination and competition between different potential auction platforms on the basis of Union or national procurement law. |
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2 |
The entity conducting the auction shall be authorised for this activity and shall provide the necessary safeguards in the conduct of their operations; those safeguards include, among others, arrangements to identify and manage the potential adverse consequences of any conflict of interest, to identify and manage risks to which the market is exposed, to have transparent and non-discretionary rules and procedures for fair and orderly auctioning and sufficient financial resources to facilitate the orderly functioning. |
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3 |
Access to the auctions shall be subject to minimum requirements as regards adequate customer diligence checks to ensure that participants do not undermine the operation of the auctions. |
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4 |
The auction process shall be predictable, in particular as regards the timing and sequencing of sales and the estimated volumes to be made available. The main elements of the auctioning method, including the schedule, dates and estimated volumes of sales shall be published on the website of the entity conducting the auction at least one month before the start of the auction. Any significant adjustment shall be announced as early as practicable in advance as well. |
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5 |
The auctioning of allowances shall be performed with the objective of minimising any impact on the ETS of each Party. The entity in charge of auctioning shall ensure that the auctioning prices do not deviate significantly from the relevant price for allowances in the secondary market over the auctioning period, a situation which would indicate a deficiency of the auctions. |
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6 |
All non-confidential information pertinent to the auctions, including all legislation, guidance and forms, shall be published in an open and transparent manner. The results of each auction conducted shall be published as soon as is reasonably practicable and include the relevant non-confidential information. Reports on the results of the auctions shall be published at least annually. |
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7 |
The auctioning of allowances shall be subject to adequate rules and procedures to mitigate the risk of anti-competitive behaviour, market abuse, money-laundering and terrorist financing in auctions. Such rules and procedures shall be, to the extent possible, not less stringent than those applicable to financial markets in the respective legal regimes of the Parties. In particular, the entity conducting the auction shall be responsible for putting in place measures, procedures and processes ensuring the integrity of the auctions. It shall also monitor the behaviour of market participants and notify the competent public authorities in the event of anti-competitive behaviour, market abuse, money laundering or terrorist financing. |
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8 |
The entity conducting the auctions and the auctioning of allowances shall be subject to adequate supervision by competent authorities. Designated competent authorities shall have necessary legal competences and technical arrangements to supervise:
To the extent possible, the supervision shall not be less stringent than the supervision on financial markets in the respective legal regimes of the Parties. |