Efforts  to  link  the EU Emissions  Trading System with Switzerland's national carbon market 

have  moved  forward  after the European Commission on Wednesday adopted two proposa

ls to finalize an agreement. 

The  linking  process  is  significant because carbon prices under the EU and Swiss systems 

would be expected to converge once the linking is complete. 

"Under  the   forthcoming  linking  arrangements, participants  in  the  EU  Emissions Trading 

System  will  be  allowed  to  use  allowances  from the Swiss system for compliance and vice 

versa," the EC said in a statement Wednesday. 

"Linking  the  EU ETS with other emissions trading systems expands opportunities for emissio

ns reductions, thereby cutting the cost of fighting climate change," the EC said. 

The EU and Switzerland have agreed on criteria and arrangements for linking their respective 

carbon markets after several years of negotiations. 

The  EC  on Wednesday adopted two proposals: one for the signature of the agreement and 

one for its ratification. 

"Signature of the agreement could take place before the end of this year. Following this, both 

sides will ensure that all criteria are met and prepare for implementation," the EC said. 

Once  technical  arrangements for linking the two systems are finalized, the agreement would 

need to be ratified by both sides. 

"The  agreement  will enter into force at the start of the year following ratification. This is not 

expected before 2019," the EC said. 

PRICE CONVERGENCE 

Pending  final  agreement,  Switzerland's carbon market will link with the EU ETS, which inclu

des 28 participating EU member states, including the UK, which remains an EU member state 

until it leaves the bloc under the Brexit negotiations. 

The EU system also includes three non-EU countries, Norway, Iceland and Liechtenstein. 

Switzerland's  domestic  carbon  market was introduced on January 1, 2008 and includes 55 

entities from sectors including cement, chemicals, refineries, paper, heat and steel, accordin

g to the International Emissions Trading Association. 

The  market  was  introduced  as an alternative option for complying with the Swiss national 

CO2 levy on heating, industrial processes and transport fuels, which came into effect on the 

same day.