IEA (2023), Switzerland 2023, IEA, Paris https://www.iea.org/reports/switzerland-2023, Licence: CC BY 4.0
Switzerland is committed to reach net zero emissions by 2050 and reduce greenhouse gas (GHG) emissions by at least 50% by 2030 compared to 1990. To support this, the government has prepared several pieces of legislation. The long-term Federal Act on Climate Protection Goals, Innovation and Strengthening Energy Security foresees substantial subsidies for replacing fossil heating and processes. A revision to the CO2 Act for the period beyond 2025 with instruments to reach the country’s 2030 target under the Paris Agreement was being debated in parliament at the time of writing. The third piece of legislation is a revision of the 2018 Energy Act to replace the indicative targets for the expansion of renewables and per capita energy and electricity consumption with binding targets complemented with concrete measures to speed up deployment.
Reaching the climate target for 2030 will require substantial efforts, especially in the building and transport sectors, which both failed to meet their 2020 sectoral emissions targets. One challenge for the government is that the domestic climate legislation is currently in a flux. A revision of the CO2 Act for the period to 2030 was rejected in referendum in 2021 and the new proposed CO2 Act is still in the legislative process. Voters have, in particular, rejected the planned substantial increase in the CO2 levy on stationary fuels. The new proposed CO2 Act shifts the focus from regulations and tax increases to incentives and foresees a notable increase in funding for measures targeting the transport and building sectors. The new proposed CO2 Act to 2030 also increases the share of emissions reductions that can happen abroad to a maximum of 40%.
Energy efficiency is a key pillar of Switzerland’s strategy towards reaching its energy and climate targets for 2030 and the net zero target for 2050. Switzerland shows notable decoupling between energy consumption and economic growth. Its total final consumption per capita is substantially below the IEA average and decreased by 13% between 2011 and 2021. However, the government’s five-year monitoring report published in late 2022 concluded that the current policy measures are insufficient to reach the 2030 targets. It is, therefore, important that energy efficiency as the first fuel principle is anchored as a pillar of new energy and climate legislation.
Switzerland recognises that by 2050 it will still emit around one-quarter of its current GHG emissions from hard-to-abate sectors, around 60% of which would be balanced via net emissions technologies (NETs) in Switzerland and abroad. The country also has plans to develop carbon capture and storage (CCS) technologies and infrastructure to avoid the remaining approximate 7 million tonnes (Mt) of carbon dioxide (CO2) from waste incineration and concrete production – a notable shift in positions compared to the IEA’s last in-depth review in 2018, when CCS and NETs were not part of the proposed policy and technology mix. However, the federal government is legally limited in the development of CO2 transport and storage infrastructure within Switzerland because surface and subsurface territorial planning is under the competence of cantons.
Ensuring security of electricity supply in winter
While advancing its energy transition, Switzerland must also ensure security of supply, especially during the winter months. There are several challenges ahead and tackling them in a co-ordinated way will require a whole-of-government, whole-economy approach.
The greatest challenges lay in the electricity sector, which will undergo major changes with the gradual phase-out of nuclear, the accelerated electrification of the heating and transport sectors, and the need to ramp-up generation from renewable electricity to ensure the net zero emissions trajectory to 2050. Primarily, solar PV and hydro are expected to fill the gap from the phase-out of nuclear power.
The Swiss electricity system has a very high degree of flexibility thanks to its large installed capacity of pumped hydro storage. But Switzerland is dependent on imports to cover its electricity demand in winter when water reserves run low, and demand is high. With the expected changes to the energy mix in neighbouring countries, the winter import dependency might become critical, although Switzerland is importing electricity mainly at times when electricity prices are low in Europe. There is hence a need to accelerate the expansion of renewable energy and, in particular, technologies that offer more generation during winter, such as wind and hydro.
The 2022 energy crisis and the tense situation in the nuclear sector in France (a major exporter to Switzerland in winter), compelled the government to implement urgent but time‑limited measures to ensure short-term security of electricity and gas supply. It advanced several policy initiatives that had been languishing in the complex Swiss legal approval system. Under the so-called “winter reserve ordinance”, Switzerland is implementing measures to address the specific Swiss electricity shortage during winter; they include the creation of and regulation for the use of a hydropower reserve of 500 gigawatt hours (GWh) and the construction of a 250 megawatt (MW) reserve power plant that can run on several fuels (gas, oil and hydrogen), with provisions for contracting pooled emergency generators and other existing gas turbines. Both would have permission to operate until the end of April 2026. By then, the ordinance would have been absorbed in the Act on the Secure Electricity Supply with Renewables that is currently in the legislative process.
In the gas sector, the government obliged the gas industry to secure additional storage capacities outside of Switzerland equivalent to 15% of annual consumption (there is no gas storage within the country) and to buy gas purchase options for about 20% of winter consumption. The energy crisis has revealed how necessary basic gas sector regulation is; the creation of an independent transmission system operator and a gas regulator should be pursued with urgency.
Facilitating permitting processes and enhancing policy co-ordination
A key obstacle to Switzerland’s energy transition is the permitting processes for energy projects which mirror complex, time-intensive governance and legal structures. Projects often face long legal proceedings, which can delay projects for decades. Although the Energy Act of 2018 requires cantons to designate areas for renewables, the practical impact so far is limited, as the overall approval process remains complex. The same legislation designates large hydro and wind projects as being in the national interest. The government should now provide legal clarification that this designation applies to all renewable power plants and their connection to the grid, as well as the building and operation of electricity grids in general. The energy security benefits of such projects should also be reflected when weighing the legal interests in individual cases.
Under Switzerland’s distinct federal structure, the cantons have extensive legal prerogatives with respect to energy and, in particular, for energy use in buildings, spatial planning and water resources. Close co-operation between the federal and the cantonal level is hence a must to advance the energy transition. Moreover, cantons have their own laws, programmes and financing schemes, which are, however, co-ordinated at the national level. As such, the model regulations of the cantons in the energy sector, developed by the Conference of Cantonal Energy Directors, have contributed to achieving some harmonisation in cantonal energy regulations for buildings. They set a best practice example. A similar approach could also be applied to further enhance harmonisation between cantons in other fields, such as permitting processes and spatial planning.
Another challenge for the energy transition is the lack of qualified labour, which is also an issue for the Swiss economy more broadly, causing delays in project development and construction. The Swiss Federal Office for Energy (SFOE), jointly with concerned stakeholders, launched a “training offensive” in late 2021 specifically targeting professions related to the building sector. This is a commendable initiative, and the government should closely monitor its implementation and reinforcement if it fails to deliver the expected results.
Relationship with the European Union
Switzerland is not part of the European Union (EU) but its energy, and in particular its electricity, market is closely intertwined with that of its neighbouring EU countries. However, since the IEA’s last in-depth review in 2018, negotiations on an electricity agreement between Switzerland and the European Union have suffered a major setback, as they were suspended in 2018. Switzerland is increasingly excluded from the advancing EU market integration, including certain market mechanisms which are crucial for grid security.
Market integration with the European Union would improve the efficiency and co-ordination of transmission flows; contribute to security of supply in Switzerland and in EU member countries, especially in view of the export of highly flexible Swiss hydropower; and offer benefits for Swiss consumers.
Switzerland’s electricity and gas markets are not yet fully liberalised and there has never been public support for this despite the government’s efforts. Moreover, skyrocketing energy prices due to the energy crisis have reduced support for further opening the market. The government has aimed to cushion the opening by ensuring that no consumer is forced into the open market and that the supplier of last resort would remain an option for each consumer. Open markets are a pre-condition for any eventual signing of an electricity agreement with the European Union.
The government of Switzerland should:
- Work together with cantons to speed up permitting of energy projects of national interest.
- Encourage the cantons to harmonise and accelerate permitting processes, improve spatial planning for renewables, and remove legal barriers.
- Ensure timely preparation for the period after 2030 by starting to conceptualise the measures that need to be included in a new draft CO2 Act for the post-2030 period.
- Introduce basic gas market regulation.
- Establish an energy efficiency first principle in the energy and climate legislation to ensure it is considered and implemented in all relevant policies and plans.
- Align its electricity market regulations with those in the European Union, including on full market opening, while preserving the system of electricity supplies of last resort, and prepare for the legal integration of Switzerland into the EU internal market.