OREANDA-NEWS. Switzerland and the EU have concluded negotiations on linking their emissions trading schemes, but the eventual linkage still depends on a political solution between the two countries on the issue of immigration.

ETS-linkage negotiations were suspended in February 2014 after a number of EU member states, including France and Germany, called for a review of relations when Swiss voters decided in a national referendum to impose curbs on immigration from the EU. Linkage talks were subsequently reopened in September 2014.

"We have been informed by the EU that the date of signature will depend on a solution regarding the issue of free movement of persons," the Swiss Federal office for the environment's scientific officer in the climate section, Sophie Wenger, said.

The conclusion of negotiations can be seen as a success on a technical level, but the political issues are still pending and the federal office for the environment cannot comment on these as it is not involved in the negotiations, Wenger said.

For the linkage agreement to enter into force, it must be signed and ratified by both countries, including being approved by the EU Council and the European Parliament. The Swiss parliamentary approval process will take another 18 months before the linking comes into effect.

The European Parliament first granted a mandate for negotiations on linking the EU ETS with the Swiss system in November 2010.

"We had several technical issues which were quite challenging to resolve, such as the inclusion of aviation. Because it places obligations on aviation operators in two distinct but linked systems, it is more complicated to include than stationary installations," Wenger said.

But that matter has now been resolved and aviation will also be included in the Swiss ETS once the Swiss-EU agreement enters into force.

Switzerland intends to stay compatible with the EU ETS on the issue of allowing companies to use offsets to cover their greenhouse gas (GHG) emissions post-2020. It is in the process of revising its ETS regulation and a draft will be published by the end of 2016 for consultation.

In its intended nationally determined contribution (INDC) under the Paris climate deal, Switzerland pledged a 50pc reduction below 1990 levels by 2030, of which a maximum 20pc share can be achieved through international mechanisms or offsets. But international offsets will be used mainly to achieve GHG reductions in non-ETS sectors such as transport and buildings.

In 2016 an annual cap of 5.3mn t CO2 equivalent (CO2e) applies to the 55 industrial units covered by the Swiss ETS. The cap will fall by 1.74pc/yr to reach 4.9mn t in 2020. At the last Swiss auction in November 2015, allowances were sold at 11.05 Swiss francs ($10.88)/t CO2e.