Cross Sectoral Policies
This chapter deals with all policies that are of great importance for several areas.
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Some abbreviations are used in this chapter. You can find explanations of all abbreviations in the glossary.
The climate crisis is in its complexity and scope an unprecedented challenge for mankind. It requires fundamental changes in all areas of the social, political and economic system, and this in the shortest possible time.
While the other chapters of the Climate Action Plan deal with solutions in specific emission sectors, this chapter will deal with all policies that are of great importance for several areas. For, just as the underlying problems are often rooted in different sectors, some solutions are useful for different sectors. The following measures therefore cover a broad spectrum, ranging from taxes to financing instruments and sales platforms. What they all have in common is that they take an across-the-board approach and propose particularly fundamental changes. Thus, the cross sectoral policies play a central role for a transition to an ecological and social future.
Policy 1.1: Moratorium on New Infrastructure until 2030
To achieve full decarbonization within 10 years in the building and industry sectors, demand levels have to decrease significantly from current levels. This applies in particular to cement and steel production, where there are currently no scalable net-zero emissions solutions available but holds true for other materials as well.
A moratorium on new infrastructure (buildings and roads) has two main goals:
- significantly reduce demand for high-emission materials and
- ensure a large enough workforce for retrofits in the building sector. This becomes feasible when at least a significant part of the workforce currently employed in new construction becomes temporarily available for renovations and retrofits.
Under such a moratorium, no new conventional buildings and no new transport infrastructure would be built from 2021 to 2030. Planning and construction permits would be limited to retrofitting and renovating existing infrastructure and buildings. Exceptions could be made for:
- Infrastructure that is net positive (i.e. it reduces and stores more greenhouse gases than it emits during production, use and demolition).
- Infrastructure to produce renewable energy, such as PV power plants and wind turbines.
- Infrastructure to help decarbonize the mobility sector such as bike lanes and public transport infrastructure.
- New production facilities for vital new technologies needed for the transformation, such as batteries, new types of renewable plastics or catalytic elements to be used for the substitution of fossil fuels.
- Other exceptions may include urgently needed public infrastructure (e.g. schools, hospitals)
The moratorium itself will reduce public and private spending and would not need any additional finance. The focus on retrofitting and renovation will require training of additional experts and workers (see Buildings, Policy 8).
Today, about CHF.- 28 billion are spent annually on new buildings and only about CHF 12 billion for retrofitting and renovation (Guerra Fabio and Schläpfer, EnDK, EnAW-Fachtagung 5.11.2019) Ideally a significant part of the CHF.- 28 billion would become partially available for renovations and retrofits.
This policy would lead to substantially more renovations and retrofitting. This would help reduce emissions in the building sector. It would also reduce the demand for steel and cement and therefore reduce emissions in the industry sector. The mitigation effect would likely be several million tonnes of CO2eq each year.
Jobs: To prevent an unemployment crisis, workers in affected jobs need to be re-trained for retrofitting, renovating and other jobs needed for the transition to net-zero. For this, a government program should be created.
Roads: Many new road projects are currently in the planning or early implementation phase but most of them will not be completed by 2030. Therefore, increases in traffic jam hours per year will not change much by 2030 with or without moratorium. Bottlenecks in road traffic are nowadays almost the only measure to slow growth in traffic volume. Therefore, a moratorium may save us stranded investments and preserve some of the landscape and biodiversity left.
Housing: Such a moratorium would raise substantial equity issues if it would make finding an apartment more difficult, especially in areas where there is already a shortage of apartments. The moratorium may lead to higher prices for apartments as supply will be decreased. Newcomers (e.g. young people who move out from home) would have a disadvantage compared to people who already have an apartment/house. More competition in the housing market could reinforce or trigger gentrification of entire neighborhoods.
It makes therefore sense to look at the current housing situation in Switzerland and discuss additional measures that could be taken to alleviate negative impacts: In 2018 each person in Switzerland used on average 46 m2 of living space. Families have the lowest average with 32 m2 and older, single-occupancy residents the highest with 70m2.
In 2019, the number of vacant apartments was high with around 75,000, i.e. 1.66% of all apartments (Bundesamt für Statistik (BFS / FSO) 2019). In addition, the number of vacant office spaces is also quite considerable. However, there are large regional differences.
The growth in apartments is about 1% per year. With a moratorium on new construction the number of apartments will roughly stay the same. If the population grows, as predicted by 0.5% each year, the available living space would be reduced by about 5% in 10 years, this translated to an average reduction from 46 m2 to 41 m2. This would require a substantial shift in how people live. Some of the possible shifts may include:
- Office space to be retrofitted to apartments.
- New life/work arrangements to reduce the hours buildings are not occupied.
- Reduction of single person households in favor of cohabitation.
Such a trend could be supported by either helping to find appropriate roommates, and service packages for the adaptation of single-family houses to new uses. Housing cooperatives in Switzerland have much expertise in managing high occupancy rates of their property and subsidized housing applies strict rules. Living with housemates may also lead to co-benefits such as better physical and mental health, see for example Wu et al. 2003, J. Kim and Cho 2019 or “The Health Benefits of Shared Living - Harvard Health” 2018.
A bonus-malus system could be introduced to create an incentive to live in smaller spaces or with roommates. Such a system would also generate revenue which could be used to provide subsidies for people strongly affected by rising rents. Households that use more than 50m2 per person would need to pay a “occupancy malus” of a fixed amount per m2 heated floor. Households that occupy less than 25m2 per person would profit from a bonus of a fixed amount per m2 heated floor. The fixed amounts are set in a way that makes this measure cost-neutral and allows for enough free apartments (e.g., more than 1%).
Other supporting policies and measures may be necessary to mitigate impacts on rents for low income people.
Impact on immigration and immigration policies: A housing moratorium would have to be supplemented with other measures to ensure that it does not lead to more restrictive immigration policies. The demand for apartments is growing considerably faster than the population. The population in Switzerland has tripled since 1850. In contrast, the number of households has increased sevenfold. Between 2012 and 2016 the population has grown by 4.7% and the number of households has increased by 5.6%.
The specifics of how such a moratorium would work would need to be carefully evaluated and designed. Some of the relevant questions that would need to be explored:
- Which exceptions to the moratorium should be possible and what would be the decision structures for permitting such exceptions? (Should exception be possible if the owner pays for the created emissions into a climate fund?)
- Does this measure free up a sufficiently large trained workforce to accomplish all the additional needs outlined in the CAP?
- How will such a moratorium affect Switzerland's economic competitiveness, i.e. what will be the economic costs and benefits of such a moratorium? What will be the consequences in terms of employment and income for people in Switzerland?
Policy 1.2: Greenhouse Gas Pricing
Putting a price on CO2 and other greenhouse gases (GHG) makes harmful activities more expensive. There are two ways to determine the cost of a ton of:
Damage cost approach: The price per ton of CO2eq is set based on taking into account all the costs and damages that climate change causes (e.g. food security, health, economic, and infrastructure impacts). There are many studies that estimate the true costs of GHG emissions. The results range from USD 12, an estimate from the US government (Epa and Change Division 2016), to EUR 640 per ton of CO2eq, an estimate from the German government (Matthey and Bünger 2019). The large range is due to the fact that the estimates depend on many assumptions with ethical implications. For example, how do we account for the damages on future generations? Should we assume the costs are the same (like in the German estimate) or should we value those costs less, because they are in the future? (The US government uses a discount rate of 5%, meaning the same damages that costs USD 100 today, are assumed to cost only USD 22 in 30 years). A Damage Cost Approach also involves decisions on how much to value human life - e.g. health costs are usually valued in units of lost GDP. Thus, implicitly, human lives in the global South are valued less than the life of a person in Switzerland.
Overall, damage costs have serious limitations because of the radical uncertainty of potentially catastrophic effects, such as the melting of the polar ice caps in Greenland or West Antarctica cannot be well incorporated (Weitzman 2009). Therefore more often the avoidance cost approach is used.
Avoidance cost approach: The price per ton of CO2eq is set to ensure consumption of fossil fuels and therefore GHG emissions go down. There are many different estimates available for this approach. Here the time frame is also relevant: The EU for example gives estimates for the short-and-medium term costs of EUR 60 - 189/t CO2eq and for long term costs of EUR 156 - 498/tCO2eq ( European Commission, Directorate-General for Mobility and Transport 2019).
Putting a price on GHGs raises the price of fossil fuels and will therefore lower their demand (how much will depend on the price level and the elasticity, see below). GHG taxes may also make climate friendly technologies more competitive and may therefore drive innovation. These policies also all raise revenue.
There are different approaches for greenhouse gas pricing policies. The main ones are: 1) Tax, 2) steering levy or 3) Cap-and-trade systems (discussed in chapter Industry, policy 4.2). Different pricing policies are designed depending on their main purpose. For example, the current Swiss CO2 steering levy on heating oil and gas is tied to emissions reductions targets. If these targets are not met, the CO2 price is raised. We propose a GHG pricing policy that is similar to the existing CO2 steering levy, with the following differences:
- The policy applies to all main greenhouse gases, including CO2, Methane, N2O etc. (The current Swiss CO2 steering levy only applies to CO2)
- The policy applies to all sectors, including buildings, industry, transportation, and agriculture as well as to fossil fuels used for non-energetic uses (the current Swiss CO2 steering levy of CHF 96 only applies to the building sector. Transport and agriculture are completely exempt. Industry is partly exempt)
- All actors, including all companies should be taxed. (Currently all large companies and many mid-sized companies are exempted)
- The tax should start in 2021 in the range of CHF 150 - 200 per ton of CO2eq and then gradually increase. For example, the tax could start in 2021 at CHF 120 (the current maximal price for the CO2 levy) and then increase annually by CHF 45 per year to reach CHF 525 in 2030 (the EU’s high estimate for long term avoidance costs) The gradual increase ensures price predictability and also enables the Border Carbon Adjustment policy to be implemented more easily (see policy 3).
- There are legal differences between a tax and a steering levy. We leave it open, which option is chosen.
- We leave it open, if the tax or levy should be tied to reduction targets and raised if those are missed or if the price should simply rise by a certain percentage point each year. Both options would be possible. An example for the latter is the Swiss levy on heavy duty transportation (LSVA, Heavy vehicle charge (performance-related and lump-sum)).
- We do not define where in the production chain the tax or levy would be charged. It can be charged close to the source (e.g. fossil fuel imports), at the site of emissions (e.g. cement plants for the process-related GHG emissions) or in the retail chain (e.g. on meat and other animal products). The options with the least administrative burden should be chosen.
It is important to note that the GHG pricing policy will only be effective if it is accompanied by the other overarching policy measures outlined in the CAP (see Impact section below).
The GHG pricing policy would generate considerable revenue. A rough estimate shows that at CHF 150 per ton, it would generate around CHF 6 bn in revenues in 2021 and then decrease to almost zero by 2030 under the goal of net-zero by 2030. We estimate total revenue through 2030 to be around 30 billion CHF.
There are strong reasons of climate and social justice (see section on social compatibility below) to give back at least parts of the revenue to the population. However, others argue that the revenue should be used increasingly to finance the needed negative emissions technologies, see for example the section “Policy Measures” in the Chapter on Negative Emissions.
The effect of carbon pricing is limited.
Although carbon pricing is often portrayed as the single most important policy measure, it is in fact only effective if it is part of a broad set of policies and measures. Although a valuable policy tool, its effectiveness is limited due to a variety of factors, including:
- Purchasing and investment decisions are often not primarily based on cost-considerations. (In economic theory this is called “non-rational behavior”);
- Some behaviors do not change very much, even if prices rise. For example, if gasoline prices go up by 10%, people drive on average only 2-3% less. (In economic theory this is called “low elasticity”);
- There are many non-cost barriers that lower the effectiveness of carbon prices: if for example no low-carbon alternatives are available (e.g. no public transport). Also, for a variety of reasons carbon pricing alone cannot drive cost‐effective investment in renewable energy. (In economic theory this is called “market failures”).
- Given the political realities, carbon prices are often too low to be effective. (This is especially true in complex systems such as cap-and-trade schemes where there are many leverage points that can be used to weaken the policy.) Often policies that are less efficient from an economic theory perspective are more effective under real-world circumstances because they are politically and socially more acceptable (e.g. incentives, emissions standards or subsidies);
- For carbon pricing to work, subsidies for fossil fuels have to be removed. They undermine the effectiveness of carbon pricing because the price for fossil fuels remains artificially low. According to the International Monetary Fund (Baoping 2019), fossil fuel subsidies amounted to about 5.2 trillion USD worldwide in 2017, which is over 6% of GDP.
Nevertheless, GHG pricing is an important element of a successful decarbonization plan. If part of a well-designed policies-mix, the GHG pricing policy could help trigger an exponential transition, once GHG-free substitutes become cheaper than fossil fuel-based technologies. The transition will be fastest for products with short lifespans.
A GHG pricing policy as suggested above could trigger additional reductions between 2% and 30% depending on how it is designed and how it interacts with the whole policy mix (For heating buildings and transportation fuels, but also in industry economists estimate the elasticity of fossil fuel demand to be around -0.1 to -0.5.).
Less affluent people spend a higher percentage of their income on energy costs and will therefore be burdened more by such a tax. Recycling back the income can alleviate some of the burden that will arise from rising costs (Sigrist, Iten, and Zimmermann 2019). Therefore, some argue that the majority of the revenues should be earmarked to support these groups, either by recycling the revenues back to them or by subsidizing cost-containment measures. (E.g. house insulation will lower heating costs and CO2 emissions or measures for regions with increased transportation costs, low population density and a lack of public transportation.) Others argue that social justice may be tackled more efficiently with other policy measures than a lump sum recycling of such a levy. Additional policy measures may therefore be needed to ensure low income households are not disproportionately burdened.
In addition, it is very important to note that this policy should not be seen as a stand-alone measure. It can only work in combination with other policies. This should on one hand contain further measures to counter financial pressure but on the other hand also measures to boost the availability of alternatives. Especially in the mobility sector it is crucial to offer people alternative forms of transport.
Questions and Uncertainties
Such a GHG pricing policy could distinguish between products that are necessary (e.g. bus to work) and those that could be considered a luxury (e.g. air travel for vacation). The answers will to a large extent be subjective and normative, nevertheless, we will at some point need to determine what we as a society deem necessary and what should be considered a luxury.
An additional levy could, for example, be put on high-impact products and activities that have been defined as non-essential, e.g. air travel or high levels of meat consumption.
Policy 1.3: Border Carbon Adjustment for a Level Playing Field
In addition to effective GHG pricing, Switzerland introduces a “Border Carbon Adjustment”. This means that for all customs categories the GHG emissions are calculated and priced according to the swiss GHG pricing. This levy is then charged as a customs duty on the corresponding products, either per physical units (kg) or per CHF import value.
If a comprehensive greenhouse gas pricing mechanism is introduced (see policy 2) the production costs of Swiss companies will rise. The additional costs faced by producers are the sum of abatement costs and the costs for the remaining emissions. If these companies compete internationally with producers with less stringent climate policies, the risk of leakage arises. Leakage can occur in two ways: One way would be that companies relocate to countries which have a less stringent climate policy to avoid the higher carbon prices. The second way would be that Swiss companies will lose some of their market shares to unregulated foreign competitors who may import cheaper products or replace some of the Swiss export. Thus, both types of leakage will not reduce global emissions and just shift them from Switzerland across the border. Since they will both result in lower production of the domestic industries, they will have a negative impact on Switzerland since jobs and income are lost.
In the past, two approaches have been applied to address the risk of leakage in Switzerland:
(i) emissions intensive companies are exempted from the CO2 levy if they opt for a target agreement (this is the case in Switzerland). This means they face only abatement costs for economic viable abatement measures but do not have to pay for the remaining emissions. They may sell emissions reduction certificates to KLIK if they overachieve the target, thus also have an incentive to overachieve their target.
(ii) companies with the risk of leakage receive free allowances under the Swiss (and EU) Emissions trading scheme on the basis of best available technologies and full plant closures are penalized by withdrawing the related allocation. This means emissions efficient companies get an incentive to invest in abatement given the opportunity to sell the surplus units.
Both approaches reduce the environmental effectiveness of the instruments as it prevents the full pass through of CO2eq costs to consumers, which will weaken the substitution effect away from CO2eq intensive commodities and reduces the incentive to reduce production. In order to overcome such distortions by abolishing free allocation in the ETS and making all other companies pay the greenhouse gas levy, border carbon adjustments (BCA) would be a promising way. As the World Trade Organization (WTO) rules are rather strict on non-discrimination of foreign producers we propose a BCA that would seek to achieve the same treatment for domestic and foreign products by applying the same requirements for imports (payment of greenhouse gas levy or ETS price on “carbon footprint”) and exempting Swiss exports (reimbursement of the levy or ETS price).
Broadly speaking, there are two ways a BCA could be applied: either per product group (e.g. cement) or by individual product. The former has the large advantage that it is not extremely complex to administer so administrative costs could be kept low. Practically, the customs administration would calculate the levy either per physical units (kg, m3, etc.) if the products are homogeneous or per CHF for all other goods and services. The disadvantage is, that this standardization would not allow to account for the actual emissions of a product. For example, all imported cement would be taxed equally, even if one was produced with CCS and the other not. However, it would simplify the implementation and keep administrative costs low. A similar system is also applied for the Value Added Tax at the border.
Ideally, BCA would be introduced jointly with other countries e.g. Switzerland jointly with the EU. Both, in the US and EU some groups and leaders have discussed this instrument for many years. In the US there has not happened much as of now (Nov. 2020), this might however change under a Biden administration since the US has always included BCA in discussions on carbon pricing. In the EU but also in Switzerland (where the Federal Council discussed to abolish industrial tariffs) a window of opportunity has recently opened. As part of the European Green Deal the European commission announced the introduction of a Carbon Border Adjustment Mechanism (CBAM). The commission is focusing on “imports only” solutions e.g. a CO2-price on certain emissions intensive sectors, implemented as an additional customs duty or as allowances surrendering requirements via the European Emission Trading Scheme (EU ETS). This offers a great opportunity for Switzerland to simultaneously introduce its own BCA and coordinate with the EU, given that emission intensive industries are regulated by the Swiss ETS which is linked to the EU ETs.
The finance situation will depend on the net-import of CO2eq in the products covered by the BCA as well as the price determined by the GHG-levy and ETS price. Rough estimates by Droz-Georget (2017) assuming a tax level of 120 CHF/t CO2eq and a net-import of goods falling under the BCA of around 70 million tCO2eq calculated a net revenue of 10 billion CHF per year. Assuming that the net-import could be halved by 2030 and the tax level raises to 210 CHF/t a total of 90 billion CHF would be generated by 2030.
This measure would increase the living and production costs in Switzerland which will have negative impacts on competitiveness. Therefore, a part of the net revenue could be used to either lower other cost factors e.g. labor costs or to be recycled back on a per capita basis.
A part of the revenues could also be used for climate finance in poor countries (see International Collaboration & Climate Finance).
The BCA will reduce distortions by abolishing free allocation or target agreements, therefore it should increase efficiency and effectiveness of those instruments. The additional impact will be largest abroad because less GHG-intensive products will be consumed and because the revenue will contribute to global mitigation efforts. At global mitigation costs projected by the World Bank for 2030 of 70 USD/t one could reduce more than 1’000 million tons of CO2eq with the BCA revenue if spent on mitigation only.
Due to higher cost-pass-through the costs of energy-intensive goods and commodities would rise significantly. This may affect poor households disproportionately as they spend higher shares of their salaries on energy-intensive goods. Therefore, part of the revenue may be used to improve the income situation of poor households.
There is a risk that trading partners would call for WTO or GATT conflict resolution and delay the introduction.
In case of a stepwise introduction, this might result in a distortion in the market for manufactured products. E.g. if imports of aluminium profiles are charged a BTA but window imports not, then the Swiss window producers would lose market shares.
Policy 1.4: “Matterhorn” The Net-Zero Purchasing Platform for Public Purchasing
Incentives to supply net-zero products are needed to speed up the transition. Public households (communities, state, federal level) including publicly owned entities and companies are an important economic sector (spending of 6% of Swiss GDP (=40 billion CHF/a) and responsible for a similar share of the Swiss consumption footprint) and owned by all of us.
The relevant laws (BöB and others) must be changed to require that public purchasing be limited to net-zero goods.
Net-zero goods either cause zero GHG emissions in the whole production and use phase or make sure that permanent negative emissions compensate for remaining technically non-avoidable emissions. Such negative emissions need to follow strict criteria and shall not be counted towards the host countries NDC (i.e. needs corresponding adjustment).
To make this possible a purchasing platform must be developed to give direct and competitive access to producers and sellers of net-zero products. The platform could be called “Matterhorn” and compete globally. The steep slope of the Matterhorn symbolizes the rapid exit envisioned by the CAP and Paris agreement. The platform would be open to private buyers as well.
For products unavailable in a net-zero quality on the global market the platform would both organize competitions (prize money for those meeting the specifications) or guaranteed purchasing submission (we buy a million net-zero pieces below a certain price). The net-zero requirement would include the full supply chain. If this requirement would prove to be unrealistic one could relax the requirement by asking for purchasing from companies that have agreed Science Based Targets for 1.5° agreed by https://sciencebasedtargets.org/ and implement them by 2030.
The existing platform KBOB https://www.kbob.admin.ch/ in the building sector and the relevant Swiss Association https://www.svoeb.ch/ for all sectors could become the hosts or driver of the platform. While it should be established immediately, the platform would steadily grow by both number of net-zero goods and services and the volume of sold/enabled purchases.
Since the measure would be indirectly mandated by law, the surplus costs would be carried by those purchasing or selling through the platform. A one-off loan to kick-start the platform could be granted by the public administration and later be repaid through revenues from a service charge.
If public purchasing becomes net-zero this will reduce the consumption emissions of Switzerland by about 6%. If the platform is used by the private economy as well the impact could become much higher.
Producers that do not adapt to net-zero-production and highly depend on the public sector may lose their business. However, this is an intended consequence of a rapid transformation and does not imply that employees of such companies do not find new employment.
Questions and Uncertainties
Such a platform may violate certain rules of WTO and WeKo because it is the intention to exclude some suppliers. The design of the platform should make sure that the best ideas and products can compete globally.
Policy 1.5: Warranty Periods against Planned Obsolescence
The statutory warranty periods should be specifically geared per product to the technically possible service life. For individual components with high wear and tear, the warranty periods are to be defined separately accordingly and spare parts are to be ensured in the long term beyond the product warranty period.
This should prevent manufacturers from falling victim to short-term profit logic and trying to increase their sales by means of "planned obsolence".
In order to enable long lifetimes, qualitatively better products have to be developed and produced. This raises the requirements to product development and manufacturing and promotes long-term partnerships and the development of a production culture (building culture). Producers will prefer more durable, simple and robust designs because they are easier and cheaper to repair in case of damage.
The introduction can take place immediately. The warranty periods must be periodically checked and adjusted.
Increasing investment costs and decreasing maintenance and amortization costs can be expected. If necessary, alternative ownership/usage concepts must be established (sharing economy/contracting/maintenance contracts).
Longer life cycles mean that products need to be replaced less often. This reduces resource and energy consumption and is more cost-effective in the long term.
Market saturation is reached faster, which leads to decreasing sales for producers. This loss of profit can be passed on to prices.
Questions and Uncertainties
For prototypes or new developments no comparison and experience data is available. This includes buildings, components and constructions. It is important not to make developments and prototypes impossible. This regulation is only suitable for serially manufactured products.
Policy 1.6: Climate Impact Assessments for Products & Services
Switzerland establishes a climate, environmental and social impact assessment (in the following referred to as climate impact assessment) for all non-food products and services. This impact assessment represents the basis for further policy actions such as the introduction of a carbon label as well as the taxing or banning of environmentally and socially harmful products and services.
Part of these climate impact assessments should be all Scope 3 impacts including (but not conclusive) packaging, chains of transportation and transportation infrastructure, emissions through deforestation and agriculture, enteric emissions from livestock, energy and heat production.
The climate impact assessment should be introduced for all non-food products and services traded. For all kinds of food an additional impact assessment and label should be done, as proposed in the chapter on agriculture. For the climate impact assessment companies and institutions are called upon to initiate appropriate audits of their own accord as soon as possible and to disclose the corresponding results. The appropriateness of such tests should be assessed by an independent public body. If necessary, this body must be able to carry out audits itself if those of the companies fail to do so or are found to be inadequate. The benchmark for the assessment must be the best known climate, environmental and social policy practice per product/service with regard to production, packaging, transport routes, distribution, life cycle, repairability and recycling at the end of use. Effective sanctions must be created so that climate impact assessments are enforced and their results lead to real improvements. If necessary, the production, distribution and trade of climate-damaging products/services must be prohibited.
The information about the products and calculation of the scores should be in an open-database accessible by everybody to allow everyone transparent access.
The financing and implementation of the climate impact assessments is the responsibility of the companies that trade the relevant products. The financing of the supervision of these tests and possible interventions (up to and including the performance of own audits) is the responsibility of the Swiss government. A part of the money needed can and must also be raised by the companies concerned, especially if the audits carried out by the companies themselves are inadequate and have to be taken over by the public authorities.
Climate, environmental and social impact assessments make it possible to uncover practices that are harmful to the environment and climate for the entire range of goods and services and to implement the best practice in terms of climate and social policy. This also applies to practices that contradict social standards, e.g. with regard to a humane labour law.
Another important dimension of climate compatibility is the transport routes that a product and its components take. Transport costs that are far too cheap, enormous wage differences worldwide and the lack of ethical behaviour on the part of many companies often lead to grotesquely high transportation. For example, Norwegian smoked salmon is transported to China to be carved there before being shipped back to Europe and ending up on the shelves of supermarkets (Donaukurier, 11.5.17). Thanks to the climate impact assessment, such practices can be uncovered and immediately stopped.
In addition to climate-relevant criteria, the assessment should also reflect other environmental concerns (e.g. biodiversity, marine protection) and social concerns. Trade unions and professional associations are to be involved in conducting the audits and assessing the concrete consequences of sanctions. If necessary, measures in the sense of a just transition must be defined and implemented. This must be the case when the results of the climate impact assessments have consequences in the manufacturing of goods, for instance lowering the output because of elimination of obsolescence.
The method of climate impact testing starts with the trade in the finished products. The chapter on industry proposes measures that intervene in the production process. Any coordination of these measures must
be examined more closely. In particular, the approaches in the chapter on industry must be used as a basis for examining how climate impact assessments can be carried out on export products and what effects this may have.
Since all products traded in Switzerland are treated equally, there should be no conflicts with provisions in international treaties on trade - although we recommend in any case suspending those provisions that
stand in the way of a successful climate policy. It could happen that certain foreign manufacturers will refuse to continue supplying the Swiss market. In any case, it is clear that climate impact assessments should quickly gain a foothold in other countries as well, i.e. become an instrument of international climate and social policy.
The argument that such an impact assessment would entail a great deal of bureaucracy is undoubtedly true. But only with the help of such bureaucracy can it be ensured that the best possible progress in climate policy can be made in each individual case. In view of the threat this bureaucracy is more than justified. Moreover, it builds up knowledge and know-how that is of the highest value for the areas and sectors concerned and for society as a whole.
Policy 1.7: Climate Impact Label for Products and Services
A climate impact label for non-food products is already possible today for some products and will, with the introduction of the climate impact assessments, become possible for all. To enforce a climate impact label for all non-food products sold in Switzerland a policy is needed. The targeted climate impact label is of similar character as the well-known nutrition indications on all food products. The goal of this policy would be to improve the transparency of the emission of each product, to sensitize and help consumers to make educated choices and reduce their ecological footprint. It will further have an impact on the companies by encouraging them to improve their processes to lower the climate impact of their products.
For food products a separate label should be created as proposed in the chapter on agriculture.
The climate impact label will be calculated based on the climate impact assessment (Policy 1.6). This label will have a detailed part mentioning the CO2eq emitted by the production and transportation of the final product as well as preceding production levels. Depending on the product type also further important information could be included, for instance the use of water resources, the impact on deforestation or animal welfare aspects.
A clear labelling strategy should be established (e.g. good, average, bad, very bad with respective color code) to facilitate the understanding for consumers and to underline when a product is climate damaging.
For a product to be sold in Switzerland, a climate impact label will need to be present on the packaging. However this obviously does not replace active measures to improve the climate compatibility of products.
Financing is needed only for the climate impact assessment which’s financing is described in the respective policy (Policy 1.6).
Companies will be interested in buying or producing goods that produce small amounts of CO2eq to make their product more attractive. This is especially because the consumers' awareness will rise significantly. Competition between products depending on their CO2eq consumption will be enabled because the consumers have reliable information for the comparison of these goods. The result of such a policy will be reduced competitiveness of climate-damaging products and companies encouraged to reduce the climate impact of their products.
Prices will not be affected at first. Based on the climate impact labelling, a ban on climate damaging products could be done. Moreover, pricing based on the climate impact could also be done but social compatibility should be taken into consideration. The solution will be to tax “climate damaging products” and substitute other products to keep essential products affordable.
Questions and Uncertainties
- It might be more difficult to calculate the climate impact of non-food products because they do not have a clear list of ingredients, but it can be done by improving the life-cycle estimation.
- How can a carbon tax be implemented in a later stage? The carbon price should be higher than 200 CHF.-/ tones in order to make any significant difference in the price.
- The ideal system would actually be to have a carbon budget, but this is difficult to implement.
Policy 1.8: Replace Commercial Advertising with Art and Education
Description Ban of Commercial Advertising from all Public Physical Spaces
In view of the threat posed by climate change, advertising and sponsoring in particular climate-damaging products (e.g. flights, dairy products, cars etc.) and services but also in general are no longer acceptable.
For example, Switzerland has been subsidizing the advertisement of milk products for decades despite its significant climate impact. Just as problematic is the omnipresent encouragement to consume more and more. The consumerist society promoted by today's advertising campaigns is neither compatible with our vision of a future based on more than material values nor with the target of reaching net zero by 2030.
Therefore, commercial advertising will be banned from all public physical spaces (streets, train stations, public transports etc.). The advertising spaces freed up by this, should be used exclusively for educational purposes and art.
In addition, an expert commission should be created to develop a model of an advertisement-free internet and a clear plan to transition to it.
The permanent consumerist takeover of public spaces is reduced. This should alleviate the pull to seek compensatory short-term satisfaction through consumption, which has climate-damaging effects. Since advertising bans often come along with a general social transformation there is some uncertainty about their specific impact. Research implies that only comprehensive bans, as proposed here, have a relevant effect (Blecher 2008). The ban will not solve technological problems, but it can help to prevent unnecessary emissions in a mid-term perspective. In the medium and long term, the most important effect will be a reduction in consumerism and a shift of desire to other fields (time prosperity, new care in dealing with goods and materials).
This measure leads to a reduction of the advertising income of the public sector, private companies and state enterprises.
However, this enables considerable savings in marketing and advertising.
If financing is needed to achieve a just transition it can come from revenue of taxes suggested in other chapters.
For some of the employees in marketing and advertising, programmes for a just transition are needed, which are to be developed together with those concerned. This can be done by the ProGJ (see policy 9.1 in the chapter Economic and Political Structures).
Questions and Uncertainties
- The broader economic consequences of the reduction in consumption are not clear. The social problems in forms of job loss created by this measure could be massive. This would then have to be countered by other fundamental structural change.
- Many important services of today's society, particularly social media and media, are financed only through advertisement. For these businesses an alternative business-model needs to be developed.
Policy 1.9: Climate Bank & Climate Agencies
Note: The basis of a climate Bank/Climate Agency policy are clear targets and rules set in all the relevant sectors to achieve GHG neutrality. The agency can then offer support by providing funding for projects needed to adhere to these rules and targets.
Concrete Policy: A climate bank is created. The bank is public, i.e. it must be self-supporting in the long term, but not profitable. This allows the financing costs, i.e. the interest on the loans, to be kept lower than in the case of private banks.
The climate bank grants credits to Climate Agencies. They are also non-profit and public. Climate Agencies are the general contractor for investments necessary to fulfill rules and targets described above and/or generally improve the GHG footprint, e.g. new heating systems, solar systems and so on. Customers of Climate Agencies are private households, companies, institutions and, if required, also public bodies. While the Climate Bank regulates the financing through banking, the Climate Agency is responsible for the practical implementation of the investments. Climate Agencies are competence centres, who have technological, business, process and legal knowledge and know the networks of providers, craftsmen and so on.
The public sector thus assumes the investments costs, which have so far been a major obstacle to the substitution of sustainable technologies. Property owners are not forced to take advantage of the agency's offer, but can also meet the requirements with their own investments.
A depreciation plan determines the annual depreciation of the investments. For example, a users' new "energy bill" consists of annual amortization payments in the amount of the depreciation and interest payments as well as the greatly reduced energy costs (e.g. to operate a heat pump). Due to the longevity of the measures implemented, these costs should be lower (and less fluctuating) than the costs of fossil fuels.
The user of the new systems is not a debtor. He only pays for the use. The only condition is that, in the event of the sale of the properties concerned, the Climate Agency is entitled to a part of the proceeds in the amount of the remaining residual value of the investment. This amount corresponds to the increase in value due to the investment. The users purchase the services of the facilities created by the investment as energy contract partners. The contract to be concluded for this purpose is valid for the lifetime of the plant. It is possible for the property owner to buy the system from the Climate Agency at a later date at the then existing residual value. Likewise, the use can also be continued with a new owner after the sale of a property, provided that the latter does not buy the system at the same time.
Money is not a scarce resource. Money is created when loans are granted (e.g. by opening a new credit line). Credits are only granted to Climate Agencies. Climate Agencies’ debts are covered by real assets, i.e. the real value of investments to households and companies. Depreciation generates the cash flows with which the loan can be repaid. With the repayment, the balance sheet total of both the agency and the bank is reduced again. So the crucial question for climate financing is not whether there is enough money, but how the model and payment plan of an investment works. In short: for the operation of the system, there is no financing necessary, because the policy is credit-based.
The only need for the Climate Bank is to fulfill legal framework conditions such as equity ratios and minimum reserves. While minimum reserves can be obtained via access to central bank reserves and the interbank market, equity capital would have to be generated, for example, via a deposit from the public sector.
The reduction of greenhouse gas emissions to net zero by 2030 requires a comprehensive ecological restructuring of energy production and consumption. Numerous technological solutions are available. Solar energy, alternative heating systems and thermal insulation are either already competitive today or will be in the foreseeable future. Their application often fails because of the high investment costs. The high initial fixed costs are offset by savings that can only be realized over longer time horizons. Demanding large investments from private households raises questions about the social compatibility of climate protection.
With a credit based solution, the achievement of climate targets could be significantly accelerated. There are no reasons for long transition periods and delays.
In the case of technologies where competitiveness is still lacking, even including the reduced risk due to the absence of cost fluctuations, financing through the Climate Bank can also be combined with subsidy contributions provided for in various areas of climate and energy policy.
Subsidies could also come into play when existing installations must be replaced for ecological reasons a long time before they are depreciated, and cost-savings by new technologies cannot compensate for an early depreciation.
The model not only massively accelerates ecological conversion, it also generates employment. In fact, the bottleneck is the working force. So, there is a strong link to policy 1.1. (Moratorium on new infrastructure until 2030).
With the system of a Climate Bank & Climate Agencies everybody has access to needed credits when being obliged to invest in climate-friendly technologies – also households with low income, but having their own house. Furthermore Climate Agencies unify the necessary competences to minimize the risk of poorly planned or implemented infrastructures.
Because Climate Banks and Climate Agencies must be non profit Organisations, costs can be lower than in a commercial setting, and there is no interest in selling oversized solutions.
Questions and Uncertainties
The risks for the Climate Bank are very low. Even if the owner of the properties should become insolvent, the agency is entitled to an amount corresponding to the current value of the investment when the real assets are sold. A greater risk occurs when property prices generally fall sharply, so that the sale yields insufficient income. This is a normal investment risk, which is very low thanks to the standard and relatively homogeneous investments required for ecological reconstruction.
If necessary, some legal frameworks may also need to be adapted. The following points should be noted:
- Solar installations and heating systems can be distinguished from a property. This is not possible with thermal insulation. As soon as an installation is inseparably linked to a building, it becomes part of the property, which means that the property owner also becomes the owner of the investment. So that such energy-saving renovations can also be financed via the Climate Bank, the appropriate legal adjustments must be made. This question is particularly important when selling a building.
- In the event of a real estate crisis, in the case of a bankrupt mortgage debtor, on the one hand the investment of the climate agency is included in the bankruptcy assets in addition to the building. On the other hand, the owner will also be pursued by the Climate Agency for his debt if he cannot pay the monthly instalments (depreciation + interest). This means that the Climate Agency can also assert claims.
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