Lead on internalising external costs

Switzerland's dithering course on a controversial energy tax seems to be straightening up into a firm road with benefits for renewables. The upper and lower houses of the Swiss parliament have at last agreed on an energy tax on non-renewables, with most of the revenue used to reduce the social costs of employment.

The tax rate will increase step-by-step to a maximum of CHF 0.02/kWh (EUR 0.013/kWh) and will raise up to CHF 3 billion year. Total national expenditure on energy in Switzerland amounts to about CHF 20.4 billion, while the external costs of environmental damage due to energy use are estimated at CHF 11-16 billion a year, says the Swiss energy agency, the Bundesamt Für Energie.

Legislation for the new tax is unlikely before 2004, but the government plans an interim measure-the introduction of a levy of CHF 0.003/kWh on non-renewables, the proceeds of which will be strictly linked to four beneficiary programs. One quarter of the proceeds-about CHF 112.5 million-will go to renewables development, one quarter to cover the stranded costs of hydro hit by falling power prices as the electricity market is liberalised, one quarter to improving efficiency of energy use, and one quarter to the government.

Disappointingly for the wind lobby, wind has not been given special mention in the support levy law, the Förderabgabegesetz. This honour is reserved for biogas, biomass and wood, photovoltaic, geothermal and heat pumps. But that does not mean that wind will not get support, says Robert Horbaty of Swiss wind association Suisse Eole. He anticipates about CHF 7 million annually will be available for wind-eight times today's budget.

Bonus payment

The renewables share of the levy proceeds will cover 60% of the cost of a project not already met by the CHF 0.16/kWh utility rate for renewables. The remaining 40% will have to be raised from customers willing to pay a premium for clean power, Horbaty explains. On average wind operators need from CHF 0.20-0.30/kWh in order to be economic in Switzerland. This leaves them having to make up the difference-and explains why there is less than 3 MW of wind in Switzerland, says Horbaty.

When the reform introducing the interim levy will be introduced is not yet clear. A referendum is to be held by November 2000, which means the levy is unlikely to be implemented before 2001. The aim, however, is to backdate it to the beginning of 2000, assuming it is approved when put to public Meantime, Swiss Eole believes it is important to follow a two-track road to wind support. While backing the new energy tax, it is also putting its weight behind the creation of a market for green power. It is one of the founding members of a new association for environmentally sound electricity, the Verein für Umweltgerechte Elektrizitaet (VfUE), founded in October for the certification of eco-electricity.

A two level eco-label will be created. The first level covers all renewables, including Switzerland's large number of existing hydro plant. The second level is narrower, covering renewables power that complies with more stringent criteria, the details of which are still being discussed.

Controversy over the inclusion of existing large hydro plant in the label scheme is being tackled creatively. Talks are now ongoing between VfUE and the Swiss utilities association over a support model where hydro power will be certified, but in return the utilities must guarantee that 0.5% of their electricity sales must sourced from new renewables plant within five years.

The founders of the VfUE are the Biogas-Forum, four utilities, the Swiss hydro association, Suisse-Eole and the World Wildlife Fund Schweiz.

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