A potential legal gap is emerging in Switzerland's use of international carbon offset credits beyond 2030, as the country's CO2 law looks unlikely to be amended in time.
The delay has led to a discrepancy between the CO2 law and the proposed new CO2 ordinance, which puts forward an extension to 2035 from 2030 currently of the crediting period for carbon credits created under Article 6.2 of the Paris climate agreement as internationally transferred mitigation outcomes (Itmos).
Switzerland's government put the draft CO2 ordinance amendment to consultation last month. The final ordinance is expected to enter into force in mid-2027.
Consultation on the draft CO2 law amendment had been planned to start this autumn, but is now only expected to start in early 2027, the Swiss environment office said on Friday.
The CO2 law, which the government started work on last year, enshrines the country's climate targets and the mandate given to the Swiss Klik foundation to buy Itmos to count towards Switzerland's targets. The current CO2 law covers the period until the end of 2030.
The amended CO2 law will enshrine the country's target to reduce its emissions by 75pc by 2040 compared with 1990 levels, including any compensation mechanism towards attaining the goal.
The draft amendment will have to go through both houses of parliament and is also likely to have to face a people's vote under Switzerland's direct democracy system. This makes it unlikely that it will enter force on 1 January 2031 as planned, but at least a year later, Klik said.
Klik managing director Marco Berg told Argus on Friday that Klik cannot sign any Itmo offtake agreements beyond 2030 in the absence of a "binding statutory mandate", except "maybe" as a pilot transaction.
The extension proposed in the draft CO2 ordinance amendment, while welcomed by Klik, would affect only the supply side, Berg said. The demand side still depends on the legal anchoring of a compensation mechanism until 2035.
The draft CO2 ordinance stipulates that Itmos may have their crediting period extended until 31 December 2035, provided the host country has submitted its nationally determined contribution (NDC), or climate plan under the Paris Agreement, covering the period until then.
This is to align the timing of the crediting period with the partner countries' NDCs and to increase planning certainty for projects, according to the explanatory report the government sent out with the ordinance.
While Klik has no mandate beyond 2030 under existing legislation, Switzerland as a signatory to the Paris Agreement does have a reduction obligation, Zurich-based consultant Mischa Classen noted.
The ordinance is to an extent playing a "pre-emptive" role to allow for the legal basis to keep running during the eventual interim period, Classen said.
The draft CO2 ordinance also extends the crediting period to 31 December 2035 for domestic carbon storage projects, or projects that generate negative emissions. This is to provide an incentive for investment in these projects, the explanatory report reads.
