Switzerland Moving Toward Carbon Tax on Fuels

25 January 2005

The Swiss CO₂ Law, implemented in 2000, mandates a 10% overall reduction by 2010 from 1990 CO₂ emissions levels. Targets for heating and motor fuels differ. The consumption of heating fuels is to be reduced by 15%, and that of motor fuels, by a total of 8%.

Switzerland structured the law in two phases: should the first, voluntary phase not achieve the target reductions, the second phase allows for the introduction of a CO₂ tax.

By 2004 (by the law, the first year a carbon tax could be implemented), it was clear that the targets would not be met. Switzerland is tracking toward a 4% reduction rather than 10%. Accordingly, the Federal Council put forward four alternatives for a CO₂ tax, with different rates, timelines and redistribution schemes.

Those alternatives went out for public discussion in October 2004. The discussion period ended 20 Jan 2005, and now the Parliament must act.

Two major Swiss climate organizations (ProClim and the Advisory Body on Climate Change (OcCC)) along with the Swiss Academy of Natural Sciences and more than 100 individual scientists are supporting the strongest proposed tax alternative:

• 9 centimes (approx $0.075) per liter  of heating oil

• 15 centimes (approx $0.125) per liter of gasoline or diesel starting in 2006

• An increase to 30 centimes (approx $0.25) per liter of gasoline or diesel starting in 2008

That works out to a tax of approximately $0.47 per gallon in 2006, with a bump to $0.95 per gallon in 2008.

It will be interesting to track how this proceeds through the Swiss parliament and what response will come from the auto and oil industries.

Resources:

• Overview of Swiss CO₂ Law (Swiss Energy Site)

• Outline of the four tax alternatives ( Office Federal de l'Environnement, des Forets et du Paysage—OFEFP)

• Swiss Federal Assembly Issue Page on CO₂ Law