Watching the Swiss: The transformative power of the Swiss energy referendum
Last week, Switzerland held a referendum on the country’s controversial new energy law. A large majority of the Swiss citizens voted in favour of the new law. This means that Switzerland is suddenly bound by stringent renewable energy targets. In one vote, Switzerland moves from lagging behind in terms of renewable energy to being one of the bellwethers in the global Energiewende.
The current situation
At the moment, Switzerland does not have a very green energy mix. This is mainly due to the fact that Switzerland is a net importer of energy, and imported electricity is often produced from oil and gas. In addition, buildings tend to be heated with diesel. The Swiss vehicle fleet is also quite old and emission-heavy.
The electricity that is generated within Switzerland is relatively low in carbon emissions, with the majority of the electricity coming from nuclear plants and large hydro facilities. However, these forms of electricity generation are not considered environmentally friendly when all effects, not just the emissions, are taken into account. If nuclear and large hydro are removed from the equation, only 3% of the electricity generated in Switzerland comes from renewable sources, such as wind or solar.
The new law
Last year, the government proposed the new Energy Strategy 2050. It outlines Switzerland’s energy ambitions for the next 30 years. An important focus of the strategy is the shift towards low-carbon or carbon-neutral energy generation. This shift will have profound repercussions on the entire energy system, and will require substantial investment. The Energy Strategy 2050 was approved by both chambers of the Swiss parliament last year.
The first, most eye-catching policy is the move against nuclear power. Existing nuclear plants can continue to operate as long as they are safe, but no new plants can be build. The first plant is set to close in 2019, with the remaining plants being gradually phased out. Nuclear power has a contentious history in Switzerland, and the issue was put to a referendum no less than eight times in recent history.
In addition, the Energy Strategy 2050 includes billions of Swiss Francs worth of subsidies for renewable energy sources. 480 million Swiss Francs would be raised annually to finance investments in renewable energy sources. This would have to lead to a fourfold increase in renewable energy generation by 2035. Because nuclear is being phased out and the potential for an increase in large hydro is small, the majority of new electricity will have to come from new renewable energy technologies.
The plan also includes drastic reductions in energy consumption per person. By 2020, the average Swiss should use 16% less energy than 2000 levels. By 2035, this should drop further to 43% less energy than the 2000 base level. Part of the proceeds of a carbon tax already in existence would be used towards this end. The tax, which stands today at around 60 CHF per tonne of CO2, is already quite a lot higher than the price in the EU Emissions Trading Scheme, but is expected to be increased even further in order to reach the desired level of renewable energy generation.
The SVP, a right-wing populist party, called a referendum on the proposed law, arguing that the whole project would be financially unattainable. While the strategy itselfs includes the figure that Swiss families might have to pay up to 40 CHF per year more for renewable energy, detractors state that the figure could be closer to 3200 CHF per year, or 80 times higher. These very diverging estimates are caused by a different approach in accounting, and the cost per Swiss family depends on what the estimated value of the new renewable energy assets is.
In addition, critics fear that the new law will put Switzerland’s prized natural landscape at risk. The new law abolishes the right of citizens to block the construction of renewable energy assets in their direct neighbourhood, in an attempt to overcome the common ‘not in my back yard’ mentality. Of course, this gives the government a very large margin of appreciation, that must be handled with due care and proportionality.
Finally, the intermittency of renewable energy is also hotly debated, with opponents of the law saying that it would jeopardise the energy security of Switzerland and negatively impact the economy due to the increased risk of blackouts. They point at the Energiewende in Germany, which has not been fully successful in its approach, resulting in very volatile electricity markets. Proponents of the law respond that the Swiss can learn from the German example and avoid making the same mistakes. Furthermore, Switzerland’s large complex of large hydro has unique potential as a form of energy storage, which can flatten out sudden peaks in supply and demand.
The changes in the law will come into force on the 1st of January 2018. Given the long-term goals of the plan, the first results will most likely only start to emerge ten years down the line.
Of course, despite the statements made by proponents of the plan, it remains to be seen whether targets set in the law are realistic and feasible. The fact that the electrical and mechanical engineering sectors opposed the plan does not seem to be a good sign. They fear an increase in cost and regulatory burden for companies.
Nevertheless, it is better to be at the forefront of innovation than lag behind. Given the long-term view of the law, it is plausible that Switzerland will be able to employ technology that does not exist today, and that offers more efficient solutions for meeting the energy targets set out in the law. What is hard today, does not need to be so in the future.