Compromise solution to slash CO2 emissions

Motor vehicles account for 40 per cent of CO2 emissions in Switzerland Keystone

The Swiss government has decided to impose a tax on heating oil and raise a levy on petrol and diesel imports as of next year, to help cut CO2 emissions.

This content was published on March 24, 2005 - 00:34

The environment minister, Moritz Leuenberger, warned though that if greenhouse gas levels were not curbed, motor fuel could also be taxed later.

The authorities plan to introduce a nine-centime per litre tax on heating oil as of 2006. The so-called "climate" levy on petrol and diesel imports should be set at up to 1.6 centime per litre.

The government admitted last year they would not meet the targets set by Switzerland’s CO2 law that came into force in May 2000. This legislation guides Swiss climate policy based on its adoption of the Kyoto Protocol on greenhouse gases.

The law aims to reduce CO2 levels by 2010 to ten per cent below what they were in 1990, and demands the introduction of taxes if targets are not met.

In October, the authorities put forward four different taxation proposals, which included the heating oil tax and the climate levy.

They said that a majority of the parties and associations consulted were in favour of the heating oil tax. This combustible accounts for 60 per cent of CO2 emissions in Switzerland.

The revenue from this tax will be redistributed to the population and the economy. Each person living in Switzerland will receive a SFr46 rebate on their health insurance bill.

Companies will also see some of their personnel costs cut proportionally to the salaries they pay out. Those who lose their competitive edge because of the tax could also be exonerated if they agree to curb their emissions.

Fair tax

Leuenberger said that this tax was fair because it would not disadvantage individuals or companies that have already taken measures to cut CO2 output.

He added that by taxing polluters, it would encourage the adoption of more environmentally friendly practices.

The government believes the tax will also help cut other greenhouse gas emissions and help slash healthcare costs.

During the consultation process, opinions were less clear about how to reduce CO2 emissions from motor fuels. The authorities decided to plump for the climate levy, which was the softest option available.

Revenue from the levy would be managed by a private foundation that would redistribute it to projects aimed at reducing atmospheric pollution. The money could also be used for the purchase of so-called emission credits abroad.

Leuenberger said that if the climate levy failed to show any real impact by 2007, the government would have to consider introducing a CO2 tax on motor fuels. The minister’s favoured option had been taxation of all fuels.

His ministry will now work out the practical details of the tax before it heads to parliament for approval, possibly before summer. The House of Representatives and the Senate will have to agree only to the amount of the tax, which is already provided for in the CO2 law.

Divided opinions

The government’s compromise solution has satisfied nobody apart from the centre-right Christian Democrats. For the centre-left Social Democrats, the climate levy is just a waste of time, while the Greens have accused the authorities of selling out to the petrol lobby.

The rightwing People’s Party is unsatisfied since it supported only at best the introduction of the climate levy. It claims that taxpayers will be forced once again to foot the bill.

The Swiss Business Federation has also voiced its discontent, saying that small and medium-sized companies will suffer and that costs will be driven up in the housing sector.

swissinfo with agencies

In brief

Around 40 million tons of CO2 are produced by Switzerland every year.

Sixty per cent comes from heating and industrial oil, with the rest from motor vehicles.

Emissions from motor fuels have continued to rise while greenhouse gas levels from heating oils has dropped.

Switzerland’s CO2 law calls for an eight per cent reduction of motor fuel emissions compared to pre-1990 levels.

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