Senate plan could lead to CO2 tax meltdown

A CO2 tax would target heating oils, a major source of emissions. imagepoint

Parliament is again due to debate a controversial tax on CO2 emissions – hot on the heels of the Nairobi climate conference and fresh warnings over global warming.

The House of Representatives has already opted for a more moderate levy than the government’s proposal. The Senate, which will discuss the tax this week, is considering a third option.

Reducing levels of harmful carbon dioxide emissions is an integral part of Swiss climate policy. The government has adopted the Kyoto Protocol on reducing greenhouse gases, as well as a tough CO2 law.

Swiss President Moritz Leuenberger recently called for a global CO2 tax while at the international climate conference in Nairobi, Kenya.

Switzerland has also introduced the so-called “climate cent”, a legally non binding charge levied on petrol and diesel imports at a rate of 1.5 centimes per litre.

But experts warn that the measures may not be having the desired effect – the United Nations climate secretariat says emissions in Switzerland have actually risen by 0.4 per cent since 1990.

Embarrassing

“The overall result of Swiss climate policy is embarrassing,” Patrick Hofstetter, from the conservation group WWF, told swissinfo. “There are others who have done worse but this is no justification for a country like ours which has such a delicate ecosystem.”

But Andrea Burkhardt, from the Federal Environment Office, remains more hopeful.

“I continue to believe that we could reach the Kyoto Protocol objectives thanks to the agreement’s flexibility. But I fear that it is too late for the aims contained in the CO2 law.”

For his part, David Syz, head of the Climate Cent Foundation, the group of business representatives managing the project, believes that progress has been made.

“The discussions about a CO2 tax are very advanced and thanks to our initiative we will manage to satisfy the Kyoto demands,” he told swissinfo.

According to the law, the CO2 tax would be introduced if the Kyoto targets were not met. But nobody can agree on the rate.

Which rate?

The law stipulates a maximum levy of SFr210 ($174) per ton of CO2. The government is calling for SFr35 per ton (nine centimes per litre of heating oil, and seven centimes per litre of natural gas).

In June the House of Representatives agreed to the levy on heating oil and gas, but the introduction would be delayed and staggered over several years.

And there was another proviso: the tax would only be introduced if fossil fuel emissions were too high for the Kyoto objectives.

The Senate will be discussing a third proposal, in which the tax rate would depend on the price of heating oil.

This would mean that a SFr35 per ton fee would be introduced by 2009 if the price of heating oil stayed under the March 2005 level for six months. Otherwise, the high prices would be enough to reduce consumption, it is believed.

But supporters of the CO2 tax say that accepting these measures would mean postponing the levy indefinitely.

The proceeds of the tax are supposed to go to families and back into the economy.

swissinfo, Marzio Pescia

In brief

Switzerland’s CO2 law formally came into effect in 2000.

Its objective is to reduce emissions of CO2 arising from fossil fuels by 10% from 1990 levels by 2010.

The desired reduction should be achieved by voluntary measures, but if they are not adequate, the government can introduce a disincentive tax on fossil energy.

Greenhouse gases

Carbon dioxide (CO2) is one of the major gases responsible for greenhouse effect and global warming. In Switzerland it represents around 80% of harmful emissions.

The other gases include methane, nitrous oxide and hydrocarbons.

Despite ambitious emission targets, greenhouse gas emissions have actually risen by 0.4% in Switzerland since 1990.