Switzerland introduces corporate milestone targets for carbon removal
The Swiss Climate Act include first-of-its kind regulation for companies.
Switzerlands Climate and Innovation Act established the country’s climate target of net-zero greenhouse gas emissions by 2050. Uniquely, the target is not just for the aggregated national emissions, it also specifically requires all Swiss non-agricultural companies, regardless of size, to reach net zero by 2050 for their corporate direct and indirect emissions. This month the act was complemented with additional guidance for corporate Net Zero Roadmaps, also mandating the ramp-up of carbon removal.
Companies are encouraged to develop Net-Zero Roadmaps that account for Scope 1 emissions (direct emissions from owned or controlled sources) and Scope 2 emissions (indirect emissions from purchased energy). It is recommended that they include Scope 3 value-chain emissions. These roadmaps are mandatory for any company seeking funding under the Climate Act but otherwise voluntary.
The roadmap guidelines also introduce what essentially are milestone targets for carbon removal. Companies roadmaps “must contain a development path for negative emissions in order to offset any direct and indirect emissions that are difficult to avoid by 2050 at the latest“ and “A continuous, ideally linear, build-up path to 2050 is recommended, starting from a reference year before 2030, with intermediate targets in 2030, 2035, 2040 and 2045. The sum of the reduction path and the build-up path for negative emissions must result in net-zero emissions by 2050 at the latest.“ (Translated from Section 6.5 of Netto-Null-Fahrpläne -Richtlinie.) They also encourage companies to go net-negative, removing more than they emit after reaching net zero. The Act specifies that permanent (“dauerhaft”) carbon removal must be used to reach net zero, but does not go into detail on how its defined1.
This is the type of requirement that I and others have been asking the SBTi to implement for companies. Net zero roadmaps that involve the use of carbon removal at net zero are not credible if they do not contain a ramp-up of CDR. Companies and countries reaching their net zero targets are the only customers of CDR, and if they don’t help develop the nascent industry, there will not be enough CDR available for them to reach their targets. Next month, Milkywire will publish a white paper I co-authored on CDR Milestone target setting, which will include more detailed guidance for corporates.
A very important consequence of the guidance is that it in practice, mandates Swiss companies to reach net zero for direct and indirect emissions on a global level. Since the guidance for the roadmaps mandates the use of the Greenhouse Gas Protocol, a logical outcome is that Scope 1 and 2 emissions from Swiss companies operating in other countries are covered.
As far as I know this is the first legislation that goes beyond regulating what happens within a country and also indirectly mandates companies to address international emissions. I am not sure if this was the intention or just a consequence of how the guidance is written. Some Swiss multinational companies in energy-intensive sectors such as manufacturing, cement, and chemicals, have large Scope 1 and 2 emissions in other countries.
Currently, the Act is a framework legislation and may not have much teeth. Companies are required to follow the mandatory parts of the guidelines, but there are no sanctioning tools in the Act. Such mechanisms may be introduced at a later date.
This is all a very interesting development. Switzerland's Climate Act is truly a first of its kind. I hope other countries follow suit regarding milestone targets, as well as encouraging domestic companies to take global responsibility for their emissions.
As I have outlined before (see post below), net zero GHG would require permanent removal for CO₂ but not necessarily for shortlived GHGs.
