Ten years of preparations culminate: EU ETS to link with Swiss market from 21 September

The European Union Emissions Trading System (EU ETS) will enable joint trading with Switzerland from the end of August. Transactions between the two markets will be possible from 21 September. The European Commission expects the link between the two markets to increase trading liquidity and thereby provide more accurate pricing of CO2 emissions. 

The linking of the two markets was envisaged by an agreement between Switzerland and the European Union that has been in force since the beginning of this year. The entire process of negotiating the terms took almost ten years. Switzerland became the first country to join the EU ETS.

Since the beginning of this year, allowances from one system can already be used to meet obligations in the other system. The link is now being expanded to include the possibility of exchanging allowances.

For now, no continuous contract settlement

The connection between the two systems, which first had to be processed, will now make it possible to trade allowances between them. The current link is described as only temporary, as it does not yet allow continuous settlement of traded contracts.

While emissions allowances can currently be traded on any day, their transfer takes place only on pre-defined dates. Until the end of this year, there will be ten trading days on which allowances can be transferred. The first is scheduled for 28 September.

The system will allow allowances to be transferred twice a month. The only exceptions are September, when the transfer will take place only once, and mid-December. In mid-December, transfers will be possible twice a week due to higher liquidity in the December delivery contract.

Settlement dates for trades have currently been announced only until the end of the year. However, the Commission expects that contract settlement dates will be extended by the end of November at the latest. Each date should be known at least one month in advance, except in unforeseen circumstances.