Climate funds: Proposals shelved since 2011

Article as analysis
For years now the Swiss Government has known how additional climate funds could be raised. A report to the Federal Cabinet on the matter makes a sudden reappearance and confirms what Alliance Sud has long advocated.

In 2009 the Federal Council commissioned the Department of the Environment, in cooperation with the Finance and Justice Departments, to prepare a report on "new and additional financial instruments for Switzerland's [public] contributions to the international climate regime". At the time, the authors assumed that Switzerland would have to face increasing payments – as much as CHF 800 million by 2020 – and this led them to examine several existing and conceivable new funding sources from which to raise the required funds, preferably on the basis of the polluter-pays principle.

The report is dated 30 November 2011 and was only recently published on the website of the Federal Office for the Environment (FOEN). The Federal Council has done the opposite of what was recommended by experts from four departments – the State Secretariat for the Economy (Seco) was also a co-signatory. The Government has constantly downplayed Switzerland's potential contributions. Second, the Federal Council had been counting on the private sector at some point to pick up the tab for two thirds of the required contributions. Yet the report showed that it was possible and wise to contemplate new financing options such as raising funds precisely where the most CO2 emissions are generated. This would also have had a desirable side-effect in terms of steering the energy transition process.

What does the report contain?

On the assumption that there would be a debt brake, the report basically envisages two options: (1) international climate funding contributions are offset within the existing areas of responsibility of the Federal Government, or (2) additional revenue is generated – preferably through a constitutional provision on earmarking – to be used for that purpose.

The advantage of the second option – new financial sources with earmarking – would be the long-term availability of funds, and on the required scale. They would also be removed from short-term parliamentary control.

The report was immediately shelved. Various highly promising funding options suggested in it (see Box) were never revisited. The Federal Council pursued only the first option and decided that climate financing contributions would be charged to the development budget from then on.

The Government is required to table a new report on climate funding options in early 2017.1 It will be interesting to see which of the proposals will be "rediscovered" after being shelved for so many years. Or whether there will even be other new and innovative ideas. Consideration could be given, for example, to the introduction of a compensatory tax on all flights, the proceeds of which would go into a climate fund or some already existing carbon offset mechanism. Any such mechanism would be tax-neutral and would consequently not be affected by the debt brake. Revenue from import sanctions on newly registered motor cars that fail to comply with CO2 emission requirements could be harnessed through such a mechanism for international climate funding.

The right turning missed

The fact that the insights and ideas in the 2011 report were never further developed is not just extremely deplorable. More than anything, the report is a missed opportunity. Shelving it led, among other things, to the earmarking of 12.5% of the SDC budget for international climate protection in the Dispatch on International Cooperation for 2017-2020.2 The draft of the new CO2 law, which is expected to take effect in 2020, also contains none of the approaches from the 2011 report. In its explanatory statement on the draft law, the Federal Council does mention that as of 2020 Switzerland must expect to pay CHF 450-1,100 million per annum in climate funding. It offers no proposals as to how these funds may be raised in accordance with the polluter-pays principle – or more precisely, under the revised CO2 law.

The dubiously shelved 2011 report would have laid the groundwork for good proposals to be further fleshed out over the five intervening years and be brought into today's policy discussion. But Switzerland is now one of a dwindling number of rich countries that go to the annual climate conferences without any financial commitments.

1 In a postulate transmitted unanimously in mid-2015, the Foreign Affairs Committee of the National Council had requested the Federal Council to prepare that report.

2 The report points out that transitional funding […] must be done "from the regular federal budget" until alternative sources are decided on. At the same time, however, it refers expressly to the use of "additional funds for development aid", as well as the FOEN blanket credit for the Global Environment Facility