Swiss Referendum on Revised CO2 Act: True Climate Justice or a Bad Compromise?

By Annia Costermani Visconti

Switzerland’s annual mean temperature has increased by around 2°C since the 1960’s, a significantly stronger warming than the global average (0.9°C). Due to its Alpine setting, climate change effects are already more perceivable today in Switzerland than in other countries around the world. Yet, today it already has a significant impact on specific economic sectors, individual lives, as well as Swiss’ biodiversity and environment, particularly its iconic melting glaciers. 

In order to comply with its commitment to the Paris Agreement, Switzerland submitted its revised National Determined Contributions (NDCs) in December 2020, committing to at least 50% emissions reduction below 1990 levels by 2030. Additionally, it committed to net-zero by 2050 . In order to achieve these targets and create a federal legal instrument for it, the Swiss parliament passed a revised Swiss CO2 Act in September 2020 after 6 years of deliberation. 

On the 13th of June 2021, Swiss citizens will vote on the revised CO2 Act. They are asked to vote on this law, because an inter-party economic committee successfully launched an optional referendum against the revised law. The right to force a referendum on a passed parliamentary decree is one of two key elements in Switzerland’s semi-direct democracy, where Swiss citizens have the right to force a referendum on a parliamentary decision by collecting 50’000 signatures in less than 100 days .

The revised CO2 Act is not a completely new law. It predominantly tightens and expands climate policy mechanisms inscribed in the first CO2 Act passed in 1999 and in 2011. Swiss climate mitigation policy uses a mix of policy instruments of market-based policies, regulation, voluntary commitments and public investment. Until 2020, its main elements were a CO2 levy on heating fuels partly redistributed to the population; compensation (offset) requirements for motor fuel importers; regulation on emissions thresholds for cars, energy production and buildings; ban on reduction on forest size; an emission trading system for large industrial emitters; subsidies for the building sector and renewable energy; and public investment in public transport and hydro- and nuclear power. Since the 1990s, petrol lobbyists have successfully prevented the introduction of a motor fossil fuel CO2 tax or levy and managed to just be required to offset a percentage of their emissions. 

The new Act mainly engraved Swiss NDCs targets into national law, tightens previous emission thresholds for housing and vehicles, increases levies and compensation values and expands current policy instruments. The new Act introduces provisions for the aviation industry mainly through a levy on flight tickets. It creates a new financing mechanism to subsidize climate mitigation and adaptation, energy efficiency, renewable energy and transport technology through a national climate fund funded by the levies. It allows all types of Swiss businesses to be exempted from the levy by implementing emission reduction strategies in their operations. It unites the Swiss and EU emission trading schemes for big industrial polluters, and for the first time it passively holds the finance and agriculture sector accountable for its climate impacts. 

Traditionally, the Swiss climate policy elite is made up by a strongly opposed pro-economy and pro-environment coalition, which reach policy compromises through the facilitation of government agencies and the central-right party . However, since 2019 and in this new revision, a stronger shift of all stakeholders towards climate-friendlier positions can be detected. Analysts attribute this shift to the numerous climate strikes held in Switzerland and the world throughout 2019, as well as parliament elections held in the same year which lead to a shift in favor of green parties and the revision of center-right and liberal parties of their stance on climate policy. The Swiss federal council and parliament, almost all parties, a coalition of the major economic, industry and energy associations, environmental NGOs and Swiss scientists are all in favor of accepting the new revision and forming the ‘YES-committee’. 

The revised CO2 Act is opposed by two camps, the first thinking that it is too stringent, useless, unfair and expensive ; the second, led by a minority of Swiss climate activists arguing that it’s not ambitious enough and a bad policy compromise. The most powerful ‘NO-committee’ is led by the right-wing party SVP and the petrol union, supported by aviation, homeowner, car dealers, and gastronomy associations. They successfully managed to mobilize 100,000 signatures and invoke a referendum, giving the Swiss population the final say. Their main argument is that Switzerland contributes only to a fraction of global climate change and therefore any Swiss action would not make any difference globally. They claim that Swiss climate policy already did enough and the new Act merely increases bureaucratic processes, unnecessary prohibitions and hinders economic growth and competitiveness. The government should not prescribe its citizens how to live. 

They additionally argue that it is too expensive and predominantly burdens low-income citizens, families, young citizens, commuters, rural citizens and small businesseEs, through higher energy, heating and transport costs. These actors are especially vulnerable, as they have smaller budgets and/or are highly dependent on fossil fuel transport. Finally, they conclude that the act could not come at a worse time as all economic sectors and citizens are suffering the social and economic consequences of the COVID pandemic. 

Their socio-economic worries can be debunked by reading the analysis of various Swiss economists who have simulated the effect of climate policy mechanisms on the economy and concluded that Switzerland could pursue ambitious climate targets without suffering significant negative impacts on its economy. Additionally, they point out that present ambitious climate action is economically more efficient than the status quo, which would cause enormous future costs. The Swiss government and liberal parties reiterate that and point out that the Act uses market-driven mechanisms that help internalize the real cost of fossil fuel consumption instead of banning it, it is technology-neutral and companies have the liberty to choose the most economically efficient path towards climate action, and it promotes innovation and green job creation in Switzerland.  

Considering equity considerations, the Swiss government and parliament state that the Act is fair and family-friendly as it is based on the polluter-pays principle and an equal redistribution mechanism, resulting in an estimate of only 100 CHF annual additional cost for the average Swiss family-of-four . This is backed by a study that concludes that the most socially efficient swiss climate policy mechanism is a carbon tax combined with a lump-sum per capita refund, hence using a revenue recycling scheme to counteract the regressive tendency of universal taxes on basic goods like fossil fuels. 

But are the minority of the Swiss climate activists right, that the Act is not ambitious enough? According to CAT, Swiss NDCs and the corresponding CO2 Act do not reflect the fair share that Switzerland should contribute to achieving Paris Agreement’s goals and would lead to a 2-3°C warming. Swiss climate scientists, green NGOs and me unfortunately agree. The Act seems just if you just consider the Swiss population, but it isn’t if you adopt a global perspective. Switzerland only considers CO2 emissions produced within its territory to calculate its emission volumes and reduction targets, which is essential to measure the domestic impacts of climate change but does not represent the full picture of Swiss contribution to global climate change. As Switzerland is a small country highly dependent on imports, its net-consumption-related GHG emissions are approximately twice as high as its domestic emissions. 

However, it allows for emission reductions and offsets to be carried out domestically and abroad, actually setting only a 37% domestic reduction target for 2030. In my opinion, only considering domestic emission production but allowing for reduction and offsets abroad represents a contradiction and does not reflect Swiss fair share of the global mitigation burden. Offsets schemes themselves make little sense in the long-term, as net- zero emissions need to be achieved globally. Countries with similar features like Switzerland ( e.g. Finland and Denmark) have set themselves with much more ambitious climate goals, demonstrating Switzerland’s conservatism. Besides, Swiss emission projections including the new climate policy mechanisms predict that they will not be enough to even reach the current goals and Switzerland has only a chance to achieve them by maintaining the emission levels of the COVID pandemic economic-downturn period. 

The most important critique is towards the Act’s measures on transport and motor fossil fuels, failing to implement the most socially and economically-efficient mechanism: a tax on all fossil fuels with a redistribution mechanism. Finally, key sectors that cause significant CO2 emissions directly or indirectly in Swiss economic consumption and production are still not held accountable. Particularly, the Swiss agriculture and financial sector are barely mentioned in the new CO2 Act and Swiss sustainability policies regulating these two sectors are miles behind EU regulations. 

Contrary to the statement of the Swiss government and the YES-committee arguing that the Act is an elaborate policy instrument mix, I still believe that it is not the outcome of a strategically planned process, but a result of negotiations between different key actors with different ideologies and interests. Hence, it is a manifestation of the currently most viable political compromise. 

Nevertheless, immediate action is more important than having the ideal policy instrument as time is key when dealing with climate change. A refusal would paralyze Swiss climate policy and any type of domestic climate action for years. It is still more reasonable to approve the Act now, and gradually ratchet it up over the next decade. Thus, in line with the views of Swiss climate scientists and green NGOs, I believe that the revised CO2 Act is an improvement and a necessary step to start the path immediately towards a more ambitious climate policy. That is why I will vote YES on the 13th of June. If you are a Swiss citizen, I hope you do too.

---

Annia Costermani Visconti is a first-year Master in Development Studies (MDEV) student at the Graduate Institute, specializing in Environment, Sustainability and Resources. She was born in Venezuela, raised in german speaking Switzerland and lived for many years in Brazil. Before coming to the Institute, she was the financial manager of Sinal do Vale, an NGO working towards sustainable territorial development in the outskirts of Rio de Janeiro. She is passionate about the research nexus of development, conservation and finance. You can reach her on Linkedin. 

---

Pictures from https://pourleclimat.ch/ https://loico2-ratee.ch/