The Swiss Carbon System: EHS, EU ETS and Voluntary Market

The Swiss ETS — Structure and Operation

The Swiss system has been operational since 2008, inizialmente come sistema volontario, diventato obbligatorio nel 2013. It is managed by the Federal Office for the Environment (FOEN) and is based on the same cap-and-trade principle as the EU ETS.

Who is subject: Swiss companies with plants emitting more than 25,000 tonnes of CO₂ equivalent per year in specific sectors — including manufacturing industry, energy production, refineries and aviation — are required to participate in the EHS. Companies below this threshold can voluntarily join as an alternative to the CO₂ tax.

Swiss allowances: Emission units are called Swiss Allowances (CHU). As in the EU ETS, companies receive a quota of free emissions and must purchase additional ones as needed. The total cap is progressively reduced.

The Link with the EU ETS

In January 2020 Switzerland officially linked the EHS to the EU ETS — an agreement that required years of technical and political negotiations. The link allows companies to use allowances from one to fulfill obligations of the other, creating an integrated market.

Practical implications:

• Swiss companies subject to the EHS can purchase European EUA allowances to cover their emissions

• Swiss CHU allowances are recognized in the European system

• Prices in the two markets tend to align, reducing arbitrage between the two systems

• Multinational companies with operations in both Switzerland and the EU benefit from unified management of carbon compliance

Remaining Differences

Despite the link, the two systems maintain some operational differences:

• The Swiss threshold (25,000 t CO₂/year) differs from the European one (10,000 t/year for some sectors, with different rules by sector)

• The Swiss registry is separate from the European registry, although linked

• Aviation is included in both systems but with partially different rules

• Governance remains separate: changes require bilateral agreement

Relevance for Companies

For Swiss companies subject to the EHS, the link with the EU ETS means direct exposure to the dynamics of the European carbon market — including price fluctuations of EUA allowances, which in recent years have recorded significant volatility.

For European companies operating or intending to operate in Switzerland, the Swiss system is substantially compatible with the European one — reducing the complexity of cross-border compliance management.

In both cases, as discussed in the article on ETS vs voluntary market, EHS/ETS compliance does not exhaust a company's climate strategy: Scope 2 and 3 emissions and carbon neutrality claims require a complementary approach through the voluntary market.

The Swiss Voluntary Market

Alongside the regulated EHS system, Switzerland has developed one of the most advanced voluntary market ecosystems in the world. Zurich hosts a significant concentration of operators specialized in climate finance, carbon credit development and sustainability — and a growing community of companies that make the Swiss market their global operational hub for the voluntary market.

At the national level, Switzerland provides a domestic credit mechanism for emission reduction projects carried out on Swiss territory, managed under the CO₂ Act. These credits — called emission reduction certificates (ARE) — can be used by companies subject to the CO₂ tax to reduce their tax burden, creating a direct incentive for investments in national climate projects.

Switzerland's positioning as a global hub for sustainable finance — with a stable regulatory framework and consolidated international credibility — makes it a natural reference point for voluntary market operators seeking operational solidity and transparency.