EU and Switzerland align their emissions trading systems

The Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems adopted Decision No 1/2026 on 9 June 2026, amending Annex I to the Agreement. The decision, published in the Official Journal of the European Union (L series, 2026/1993, of 4 September 2026), updates the essential criteria that keep the two carbon markets compatible. It was signed in Brussels by Ruben Vermeeren (Secretary for the European Union), Beatriz Yordi (Chair) and Thomas Meier (Secretary for Switzerland).

Aligning the Swiss ETS with the revised EU directive

The decision reflects the regulatory changes accruing from the revision of Directive 2003/87/EC by Directive (EU) 2023/958 and Directive (EU) 2023/959, which aligned the contribution of the EU ETS to a net domestic reduction of at least 55 % in greenhouse gas emissions by 2030 compared with 1990, as agreed by the European Council in December 2020. Under Article 13(2) of the Agreement, the Joint Committee may amend the Annexes, and in its 7th meeting of 4 December 2024 it agreed to cover the resulting changes to Annex I in a single update.

The Agreement itself entered into force on 1 January 2020 following Decision No 2/2019 of the Joint Committee. The new decision replaces Parts A and B of Annex I, covering stationary installations and aviation respectively, and enters into force on the date of its adoption.

Key technical alignments

The updated Annex I sets out the essential criteria that both systems must meet, referencing the EU and Swiss legislation as in force on 1 January 2025:

• Cap stringency: the EU linear reduction factor is 4,3 % per year from 2024 to 2027 and 4,4 % from 2028; Switzerland applies a 6,4 % factor in 2025 as an adjustment, then 4,3 % from 2026 and 4,4 % from 2028.
• Market stability: the EU Market Stability Reserve (Decision (EU) 2015/1814) is mirrored by Swiss provisions on auction-volume reduction and cancellation of unassigned allowances.
• International credits: neither system provides entitlements to use international credits from 2021 onwards.
• Free allocation: both systems allocate on the basis of benchmarks and adjustment factors, with Swiss free allocations not exceeding EU levels in 2021–2025.
• Market oversight: the EU’s MIFID II, MIFIR, MAR and anti-money-laundering rules are matched by Swiss financial-market legislation, with emission allowances not qualified as securities under the Financial Markets Infrastructure Act.

Aviation coverage

For aviation, the decision aligns the scope of coverage, with flights arriving at or departing from Swiss aerodromes covered by the Swiss ETS, and flights between the EEA and Switzerland covered by the EU ETS. It also harmonises the list of excluded flights (military, customs, police, search-and-rescue, training and research flights, among others), the surrender and compliance rules, and the administrative attribution of aircraft operators, including the one-stop shop for aviation account holders and the mandate given to Eurocontrol.

The update guarantees the integrity of the linked carbon market and excludes distortion of competition between the two systems, keeping the EU–Switzerland link operational as both jurisdictions tighten their climate ambition towards 2030.

Source: Official Journal of the European Union, L series, 2026/1993, 4 September 2026 (official reference: CELEX L_202601993).