Industry and Service Sector
Industry and the service sector need to take their responsibilities in tackling the climate crisis, so that we can consume the products and the services we need without fueling the climate crisis.
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Some abbreviations are used in this chapter. You can find explanations of all abbreviations in the glossary.
Industry and the service sector are taking their responsibilities in tackling the climate crisis. We can finally consume the products and services we need for a good quality of life, without worrying that our consumption is fueling the climate crisis. Innovation of sustainable technologies and materials and their implementation is being promoted. We have a functioning emissions trading system with a very limited number of certificates and a reduction path with a net 0 target for 2030. Synthetic substances harmful to the climate will be banned or replaced. A market such as Amazon is considered obsolete and will be replaced by a platform where only zero-emission products are traded. Ambitious action plans will be drawn up by all producing-entities as early as 2021. Many of the measures will already be implemented in the coming years. It is thus becoming increasingly clear that change is possible and what our world will look like after 2030.
Overall, the service and industry sectors are currently responsible for just under 24% of Switzerland's greenhouse gas emissions (FOEN 2020b).
The service sector contributes mainly through heating emissions, which can be estimated at approximately 4 million t CO2eq (FOEN 2020d).
The industry sector causes emissions firstly due to the consumption of fossil fuels and secondly to industrial processes that emit CO2 and other greenhouse gases (B. Meier et al. 2018):
- The consumption of fossil fuels caused an average of about 5.0 million t CO2 in the years 2014-2016. The most energy-intensive sectors are cement production, chemistry and food processing, which together account for over 90% of these emissions.
- In the same time span, industrial processes generated an average of 4.1 million t CO2eq. Around 85% of these greenhouse gas emissions come from cement production (50%) and the consumption of hydrofluorocarbons for cooling and air conditioning units (35%).
The thermal processes of the Swiss industry and service sector can be divided into 3 temperature levels: Space heating (up to approx. 70 degrees flow temperature), low temperature process heat (up to approximately 120 degrees) and high temperature process heat (up to over 1’400 degrees). According to the study "Renewable energies in industry" by the Swiss Federal Office of Energy, there are technical solutions for substitution for both space heating and low-temperature process heat. Only in the case of high-temperature process heat is it currently not possible to replace all processes with renewable heating systems, as CO2 is sometimes indispensable for the process.
The most important existing climate policy instruments for the industrial sector:
Since 2008, a CO2 steering levy has been imposed on fossil fuels such as heating oil or natural gas. The CO2 law already stipulates that the levy rate is to increase at certain intervals if reduction targets are not met. At present, the levy is CHF 96 per ton of CO2eq. This corresponds to approximately 25 centimes per liter of heating oil. According to the Federal Council, the maximum levy rate should be able to rise to a maximum of CHF 210 by 2030. Two thirds of the revenue from the levy will be redistributed to the population and the economy. The remainder will go to the buildings program and promote the renovation of buildings, and CHF 25 million of the revenue will be made available annually to the Technology Fund. Through this fund, the federal government guarantees loans to companies that develop and market innovative products and processes that reduce greenhouse gas emissions or promote renewable energies (The Federal Council 2017).
Only about 50% of the emissions of the industry and services sector are subject to the CO2 levy, because companies can have the tax refunded, either by participating in the emissions trading system or by target agreements.
Emissions trading system
Currently, the largest emitters of greenhouse gases in industry, such as producers of cement, iron & steel, chemicals, pulp & paper and refineries are covered by the Swiss Emission Trading System (CH-ETS). Today, these are 54 installations that emit around 5.5 million tons of CO2eq annually. The Swiss ETS has been linked to the European ETS (EU ETS) since January 2020, which means that Swiss companies can buy European emission allowances and have them credited to their account, and European ETS companies can buy Swiss emission allowances. Industrial companies currently benefit from a free allocation of emission allowances and companies participating in the ETS are exempted from the CO2 tax on fuels. Due to the free allocation, the closure of TAMOIL and the use of emission reduction certificates of the Kyoto Protocol, too many emission rights are in circulation. Because the market price for CO2 emission rights was therefore low, the Swiss ETS has so far created hardly any incentives for emission reductions (Eidgenössische Finanzkontrolle 2019).
Target agreements with CO2 levy exemption
Companies can be exempted from the CO2 levy if, in return, they commit themselves to reducing their own greenhouse gas emissions. A study suggests that, for the most part, target agreements do not lead to more emission reductions, but rather subsidize business-as-usual (André Müller and Steinmann 2016).
Approximately 14% of the CO2 emissions of the industry and service sector are covered by such target agreements. It is expected that as the CO2 levy rate increases, more companies will enter into a target agreement.
GHG reduction in the industry and service sector relies heavily on certain policy measures covered in other chapters of the CAP, namely the following:
Moratorium on new infrastructure (Cross-Sectoral Policies, Policy 1.1)
To achieve full decarbonization of the industry sector without at the same time increasing emissions elsewhere through imports, demand for emissions-intensive products and services needs to be significantly lowered. We therefore propose a moratorium on new construction, including buildings, streets and other infrastructure that use GHG-intensive materials (e.g., cement, steel).
Prohibition and replacement obligation on fossil & electric heating systems (Buildings, Policy 3.1)
Thermal processes as well as space heating in the industry and service sector must be decarbonized rapidly and with no exception. No new fossil fueled heating systems will be installed, and existing ones have to be replaced by renewable energies. This of course also includes the burning of coal.
It is true that coal has played practically no role in Switzerland for decades and is stagnating at 0.5% of Switzerland's gross energy consumption (SES 2020). Nevertheless, 156,000 tons of coal are still burned in Switzerland every year (BFE 2020), more than four-fifths of it by the cement industry (BFE 2015), which corresponds to annual CO2 emissions of at least 468,000 tons CO2eq.
Greenhouse Gas Pricing (Cross-Sectoral Policies, Policy 1.2)
While the remaining production shall be transformed to become net-zero-compatible by 2030 we want the market to also adjust the demand for products by internalizing external costs. Both, domestic emissions and emissions embodied in imported goods shall carry these external costs.
Border carbon adjustment (Cross-Sectoral Policies, Policy 1.3)
To prevent leakage and the export of emissions and to protect Swiss industries, a border tax should be implemented to create a level playing field.
Additionally, we propose the following 7 policy measures specifically for the industry and service sectors:
Policy 4.1: Ban on Technical Gases with High Radiative Forcing
Policy 4.2: From Emission Trading Scheme to CCS Financing Instrument
Policy 4.3: Regulations for the Swiss Commodity Trade
Policy 4.4: Net-Zero Action Plans for all Producing Entities
Policy 4.5: Implementation of all Net-Zero Ready and Viable Measures Incentivized with Early Adopter Bonus
Policy 4.6: Support to Implement Net-Zero Ready but Uneconomic Measures
Policy 4.7: Net-Zero Technology Program
- SFOE. 2015. “Kohle.” 2015. https://www.bfe.admin.ch/bfe/de/home/versorgung/fossile-energien/kohle.html.
- Stucki, Tobias, and Martin Woerter. 2017. “Green Inventions: Is Wait-and-See a Reasonable Option?” Energy Journal 38 (October): 43–68. https://doi.org/10.5547/01956574.38.4.tstu.
- The Federal Council. 2017. “Botschaft Zur Totalrevision Des CO2-Gesetzes Nach 2020.” 1.1.2017.
- SES. 2020. “Kohlekraft in Der Schweiz.” 2020. https://www.energiestiftung.ch/fossile-energien-schweiz-kohle.html.
- FOEN. 2020. “Klima: Das Wichtigste in Kürze.” 2020. https://www.bafu.admin.ch/bafu/de/home/themen/klima/inkuerze.html#43_1543577669224__content_bafu_de_home_themen_thema-klima_klima--das-wichtigste-in-kuerze_jcr_content_par_tabs.
- Eidgenössische Finanzkontrolle. 2019. “Evaluation Der Lenkungswirkung Des Emissionshandelssystems.” http://www.efk.admin.ch.
- The Federal Council. 2018. “Umwelttechnologieförderung 2012-2016.” Bern. https://www.newsd.admin.ch/newsd/message/attachments/51983.pdf.
- Meier, Beat, Christian Vogler, Corinne Moser, and Reto Dettli. 2018. “Überprüfung Der Schweizer Klimaziele Nach Dem 1.5-Grad-Bericht Des Weltklimarats.” https://www.econcept.ch/media/projects/downloads/2018/12/2148_be_KlimazieleSchweiz_nach_IPCC_1-5-Grad-Bericht_2018_11_29.pdf.
- FOEN. 2020. “Switzerland’s Greenhouse Gas Inventory National Inventory Report.” www.bafu.admin.ch/climate.
- Müller, André, and Sarina Steinmann. 2016. “Auswirkungen Eines EHS- Linkings Schweiz – EU Für Den Stationären Bereich.”
- Wehrli, Roger, and Ensar Can. 2019. “Agrarpolitik Einfach Erklärt.” https://www.economiesuisse.ch/de/dossier-politik/wie-wird-die-landwirtschaft-der-schweiz-subventioniert.
- SFOE. 2020. “Schweizerische Gesamtenergiestatistik 2019.”
- FOEN. 2020. “CO2 Statistics: Emissions from Thermal and Motor Fuels.” 2020. https://www.bafu.admin.ch/bafu/en/home/topics/climate/state/data/co2-statistics.html.