Calculating the free allocation of Emissions Allowances for Swiss companies
With First Climate expert assistance, the free allocation of Emissions Allowances for the third emissions period (2021-2025) of the Swiss Emissions Trading System (ETS) has now been finalized for companies in Switzerland. First Climate was involved in the calculation process.
Comparable to other Emissions Trading Systems, the Swiss ETS is designed to limit greenhouse gas emissions from companies in GHG intensive industries by a cap-and-trade system. Each company is allowed a certain amount of emissions free of charge. If a company’s emissions are lower than the allowance, it can sell its surplus. Once emissions go over that allowance however, companies are then required to purchase credits. These credits can be a trade for another ETS company’s surplus.
2021 marked the beginning of the next trading period for the Emissions Trading System in Switzerland, making a new set of regulations and emissions allowance calculations for installations in Switzerland necessary. For each trading period the allocation must be calculated for each individual company and facility based on the principles laid down in the Swiss CO2 Act. This transition to the next trading period is why the calculations are so important—Swiss companies in the ETS need them as a benchmark to know exactly how much they need to reduce their emissions.
First Climate’s expert team evaluated individual companies in the pharmaceutical, chemical, and energy sectors to determine their free emissions allowance and set emissions monitoring processes in place. The company was selected as one of a group of expert service providers to complete emissions allowance calculations on behalf of the Swiss Federal Office for the Environment (FOEN).
Quite a few factors were taken into consideration for the calculating process: the company's energy production and energy consumption, its production processes, fuel consumption and its related emissions, among others.
The small expert team of four put in over 2,000 hours of work, including multiple company site visits, calculations, and calculation validation checks with the other expert groups to ensure that the calculations were accurate.
“It was a very diligent process of first collecting the relevant data, verifying that data, conducting calculations, and then having all calculations validated before they can be accepted by FOEN,” explained Luzia Bieri, Head of Audit and Compliance at First Climate who led the calculating team. “It was challenging, important work and truly rewarding to be a part of.”
The calculations for this trading period have been completed, but a mandate given by FOEN ensures that First Climate experts are available through 2024 to assist FOEN if there are any changes or if another company enters the ETS system.
Urs Brodmann, Managing Director of First Climate Switzerland AG, expressed his pride at the completion of the project:
“The installations within the ETS are in high emission industries. This makes them key actors in the climate change discussion with potential to make real change on the ground. These ETS calculations bring them to the table to examine exactly how much CO2 they are emitting and consider effective climate action plans. Being a part of this process makes us at First Climate excited to see how these companies now at the intersection of economic activity and climate change mitigation might choose to take on a more prominent role in helping solve the climate crisis.”
For more information on the Swiss ETS: The Swiss Emissions Trading Registry (EHR) (admin.ch)
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