Disentangling the effects of Swiss energy and climate policies

Panel: 2. Energy efficiency policies – how do we get it right?

This is a peer-reviewed paper.

Authors:
Regina Betz, Zurich University of Applied Sciences (ZHAW), Switzerland
Thomas Leu, Zurich University of Applied Sciences, Switzerland
Reto Schleiniger, Zurich University of Applied Sciences, Switzerland

Abstract

Switzerland is embarking on a new energy strategy by phasing-out nuclear power and increasing renewables and energy efficiency as well as meeting its Kyoto target of the Second Commitment Period. We contribute to this new cruise by disentangling the effects of the Swiss economic policies to promote energy efficiency and the use of less CO2 intensive energy sources. Those policies encompass a CO2 levy, an emissions trading scheme (ETS), a renewable feed-in tariff as well as some national and international offsetting and target agreements.

The policies target different sectors and are linked in various ways either by exchanging tradable units or by serving as exemption criteria. For example companies can negotiate target agreements or participate in the Swiss ETS in order to be exempted by the CO2-levy. Given these interactions, those policies form a world-wide unique instrument mix by combining a tax, emissions trading, voluntary agreements, subsidies and project-based mechanisms on national and international level.

Our findings show that this combination of policies leads to inefficiencies. For example, external costs of road-based mobility have been inadequately internalised and emissions abatement efforts are unevenly spread among sectors. It also reveals that due to the interactions the emission reductions from each policy are difficult to predict and complex rules are needed to avoid double counting. Finally, meeting future targets domestically when less surplus is carried-over from the previous commitment periods seems ambitious given the low emissions intensity of the Swiss electricity mix and high efficiency in the industry sector.