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"Offsetting CO2 emissions projects and programmes: A Notice of the FOEN in its capacity as enforcement authority"

Offsetting CO2 emissions projects and programmes: A Notice of the FOEN in its capacity as enforcement authority

This notice by the Federal Ministry for the Environment (FOEN) provides an overview on the rules and regulations related to CO2 emissions projects and programmes for offsetting purposes.

Regulatory Background
The CO2 Act (SR 641.71) requires producers and importers of fossil fuels to offset part of the CO2 emissions resulting from their release. To do this, they must submit attestations from offsetting projects or programmes conducted in Switzerland or abroad that meet the requirements set out in Art. 5 and 5a of the Ordinance of 30 November 2012 on the Reduction of CO2 Emissions (SR 641.711, CO2 Ordinance). Eligible projects or programmes must relate to the greenhouse gases listed in Art. 1 of the CO2 Ordinance.

Ineligible Project Types
According to Annex 2, 2a, and 3 of the CO2 Ordinance, the following project types are ineligible:

1) Switzerland
- Nuclear Energy: Projects involving the use of nuclear energy.
- Research Consulting: Research, technologies in early development stages, or information and consulting services.
- Unverified Renewable Fuels: Use of renewable fuels that do not have an assigned proof of origin in the tracking system.
- Fossil-to-Fossil Replacement: Replacing fossil energy sources with other fossil energy sources (e.g., in heating boilers, vehicles, or hybrid vehicles).
- Electric Process Heat: Using electricity as a fuel substitute for process heat (unless used in heat pumps or if the electricity is guaranteed to come from renewable sources).
- Non-Use: Projects based on the waiver of use or under-utilization of resources.
- Biochar: generally excluded, except when used as fertilizer (compliant with strict annual limits and the Fertilizer Ordinance) or construction material (if sustainable production is ensured).
- Adsorption/Absorption Technology: Using these techniques for cooling or heating (unless utilizing decentralized, sufficiently available waste heat).

2) International
Energy Industry
Nuclear Energy: Projects using nuclear energy.
Large Hydro: Hydroelectric power plants with an installed capacity of more than 20 MW.
Outdated Industry: Projects in large industrial facilities that do not correspond to the global state-of-the-art technology.

Fossil Fuels
- Investments in the use of fossil fuels for energy generation or extraction (unless it strictly improves energy efficiency without altering the fossil fuel facility).
- Projects based on avoiding the extraction of fossil energy carriers.

Nature Forestry
- Biological Sequestration: Projects for biological CO2 sequestration (e.g., planting trees).
- Geological Sequestration: Geological CO2 capture and sequestration.
- Deforestation: Projects focusing on the reduction of deforestation or forest degradation.
- Biochar: Generally excluded, except when used in construction material (ensuring sustainable production and disposal).

Waste Management
- Inactive Waste Management: Activities in the waste sector that do not involve material/energy recovery or waste reduction.

Geography Policy
- Non-LDC Countries: Projects not located in Least Developed Countries (LDC), unless they fall under specific older Kyoto Protocol exceptions (registered/achieved before 2013).
- Human Rights Ethics: Projects that violate human rights or have significant negative social or ecological impacts.
- Policy Conflicts: Projects that contradict Swiss foreign or development policy objectives.
- No Consultation: Projects where no consultation with affected stakeholder groups was carried out.

Additionality
Projects need to demonstrate their additionality. This can be done either through an economic analysis, which seeks to demonstrate that the sale of issued certificates is a key incentive mechanism, or through a technical barrier analysis, where it must be shown that technical barriers prevent project implementation and that additional revenues are needed to overcome them.

Project authorisation procedure
1) The applicant submits a detailed project description using the binding FOEN template, which includes the calculation method for emission reductions, a monitoring plan, and an economic feasibility analysis.
2) An independent, FOEN-approved Validator and Verifier (VV) examines the project description to ensure compliance with the CO2 Ordinance and issues a validation report.
3) The FOEN reviews the application and validation report to decide if the project qualifies for attestations and issues a ruling.
4) Once the project is operational, the applicant monitors data according to the approved plan and compiles it into a monitoring report for each calendar year.
5) A different VV (not the one who performed the validation) verifies the monitoring report to check data accuracy and compliance.
6) Based on the verified monitoring report, the FOEN decides on the issuance of attestations for the proven emission reductions.
Projects Abroad: These require parallel authorisation from the partner country, a Letter of Authorisation (LoA), and confirmation that the partner country has recognized the transfer to prevent double counting.

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A tax advantage is an economic benefit applied to certain accounts or investments that are, by law, tax-reduced, tax-deferred, or tax-free. This can apply to investments in areas such as green energy projects or the agricultural sector, where tax advantages can help manage financial risks.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

A subsidy is a direct or indirect payment to individuals or businesses, typically provided as a government cash payment or a specific tax reduction.

Direct investments by the governments using public funds. This can be to support climate initiatives or integrate climate into other projects.

Compulsory, required payments to the government that are levied more-or-less in proportion to the services provided. Fees and charges range from entrance fees to national parks, charges on land-based sewage discharge.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Financial actors and resources that are primarily directed towards climate change mitigation, adaptation and compensation.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Actions or measures to adapt terrestrial systems to climate change.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

A potent, short-lived greehouse gas, largely released from livestock, fossil fuel extraction and waste management.

Analysing climate change as a political and ethical issue, recognising how it -- and the exploitation of natural resources broadly -- impacts people, communities and countries differently and disproportionately.

Terrestrial means "of the earth" and relates to the risks to ecological system that includes all living organisms and their interactions within land-based environments, such as forests, grasslands, and deserts.

Air pollution involves harmful contaminants in the air, affecting both indoor and outdoor environments. It can lead to health issues like respiratory diseases and heart problems, and climate impacts such as global warming. Pollutants can damage plants, trees, habitats, and water bodies like rivers and lakes.

Energy derived from biological compounds that are renewable due to their short life cycle within the carbon dioxide cycle.

Production of electricity and heat from solar irradiation.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

This sector involves managing waste treatment, sanitation, pollution control and environmental cleanup.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector involves activities to move goods and people, alongside the storage of products.

This sector provides communication services, software development, and IT solutions.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

Activities that relate to the production of goods and services from forests.

the fair distribution of risks and opportunities of climate change and the transition to a regenerative economy, cognisant in particular of disproportionate impacts on vulnerable communities and the working class

Procedural justice means ensuring that decision making is fair and inclusive, emphasizing the agency and influence of vulnerable groups and those most impacted.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

"Offsetting CO2 emissions projects and programmes: A Notice of the FOEN in its capacity as enforcement authority"

Policy instrument

Risk

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance