This measure should help to reduce CO2 emissions and enable Switzerland to meet its commitment under the Kyoto Protocol (see Box 1). It is designed to encourage businesses and the public to use fossil fuels more efficiently and to invest in renewable forms of energy.

The levy is being introduced in accordance with the decisions adopted by Parliament in March and by the Federal Council in June 2007 (see Box 2). The CO2 Ordinance requires the introduction of a levy in January 2008 if CO2 emissions from heating and process fuels have not been reduced by at least 6% in 2006, compared with 1990 levels.

The CO2 statistics published today by the Federal Office for the Environment FOEN show that this target has not been met. Emissions in 2006 amounted to 95.4% of those in 1990, while the target was 94%. Although energy consumption declined between 2005 and 2006 (see the media release issued today by the Swiss Federal Office of Energy SFOE), a more substantial reduction would have been expected in view of the mild winter (see "Statistics on CO2 emissions").

Levy of CHF 12 per tonne of CO2 emitted

With effect from 1 January 2008, a levy of CHF 12 (€ 7.5) per tonne of CO2 emitted will be charged by the Federal Customs Administration on imported fossil fuels for heating. This is equivalent to a levy of approximately CHF 0.03 per litre of heating oil and CHF 0.025 per cubic metre of gas. No levy will be charged on wood or biomass, as these sources of energy are carbon neutral: the CO2 absorbed during their growth is released when they are burned.

The rate of the levy was set by Parliament and approved by the Federal Council. It will be progressively increased in 2009 and 2010 if CO2 emissions are not sufficiently reduced.

As the levy is not a tax but an incentive measure, the revenues are to be fully redistributed to members of the public via health insurance companies and to businesses as a percentage of wages paid. Revenues collected in 2008 are to be redistributed in 2010.

Rewards for efforts undertaken by businesses

For businesses, efforts to use fossil fuels more efficiently and reduce CO2 emissions are worthwhile. As well as lowering their energy costs, businesses can be exempted from the levy if they take on a legally binding commitment to cap their CO2 emissions.

The roughly 600 businesses that have already agreed a CO2 emission cap with the federal authorities are required to have their voluntary agreement converted into a legally binding commitment by 1 September if they wish to be exempted from the levy in 2008. Extensions of the deadline may be granted on request.

Other businesses wishing to be exempted from the levy are required to submit a proposal to limit their CO2 emissions to the FOEN by 1 September. Such proposals are generally elaborated with the federally mandated Energy Agency for the Economy (see link below). Practical information for businesses has been published on the FOEN website.

Box 1: From the Kyoto Protocol to the CO2 Act
In order to combat climate change, Switzerland took on a commitment under the Kyoto Protocol to reduce greenhouse gas emissions by 8% below 1990 levels by the period between 2008 and 2012. As CO2 is the main greenhouse gas emitted in Switzerland (accounting for more than 80% of emissions), Switzerland stipulated a reduction target for this gas in the CO2 Act. By 2010, energy related CO2 emissions are to be reduced by 10% compared with 1990 levels.
Since this target cannot be met by voluntary measures alone, additional measures were approved by the Federal Council: the introduction of a CO2 levy on heating fuels, the collection of a "climate cent" on motor fuels by the private sector (Climate Cent Foundation) and tax relief on biofuels. Together with the measures already implemented, these additional measures should allow Switzerland to meet its international commitments.

Box 2: The end of a lengthy debate
In June 2005, the Federal Council decided to set the rate of the CO2 levy at CHF 35 per tonne of CO2 emitted and submitted a report and a draft CO2 Ordinance to Parliament.
After lengthy deliberations, Parliament adopted new provisions in March 2007. The levy was to be introduced in three stages, depending on whether or not the interim targets for CO2 emission reductions had been achieved:
- from 2008, a levy of CHF 12 francs per tonne of CO2 (i.e. 3 cents per litre of heating oil), if emissions from heating fuels had been reduced by less than 6% in 2006 compared with 1990 levels;
- from 2009, a levy of CHF 24 francs per tonne of CO2 (i.e. 6 cents per litre of heating oil), if emissions had been reduced by less than 10% in 2007 compared with 1990 levels;
- from 2010, a levy of CHF 36 francs per tonne of CO2 (i.e. 9 cents per litre of heating oil), if emissions had been reduced by less than 13.5% in 2008 compared with 1990 levels, or by less than 14.25% in one of the following years.
The Federal Council approved Parliament's proposals in June 2007 and amended the CO2 Ordinance accordingly. The Ordinance will enter into force on 1 July 2007.

CO2 levy on heating fuels to be introduced as of January 2008