Decision No 1/2023 of the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems of 15 November 2023 as regards the amendment of Annex I, and the insertion of a clarification in Annex IV, to the Agreement [2024/301]

Official Journal EN of the European Union L series 2024/301 25.1.2024 DECISION No 1/2023 OF THE JOINT COMMITTEE ESTABLISHED BY THE AGREEMENT BETWEEN THE EUROPEAN UNION AND THE SWISS CONFEDERATION ON THE LINKING OF THEIR GREENHOUSE GAS EMISSIONS TRADING SYSTEMS of 15 November 2023 as regards the amendment of Annex I, and the insertion of a clarification in Annex IV, to the Agreement [2024/301] THE JOINT COMMITTEE, Having regard to the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems(1)(‘the Agreement’) and in particular Article 13(2) thereof, Whereas: (1) The adoption of Decision No 2/2019 of the Joint Committee(2) fulfilled the conditions for linking set out in the Agreement and enabled the Agreement to enter into force on 1 January 2020. (2) In accordance with Article 13(2) of the Agreement, the Joint Committee may amend the Annexes to the Agreement. (3) On 1 January 2021, a new trading period started in the emissions trading system of the European Union and the emissions trading system of Switzerland. (4) The new trading period introduced regulatory changes to both emissions trading systems. (5) In view of major developments in both emissions trading systems, as referred to in Article 13(7) of the Agreement, it is appropriate to reflect the regulatory changes by amending Annex I to the Agreement in order to include necessary clarifications in the essential criteria laid down in that Annex so that compatibility of the two emissions trading systems is maintained, market integrity is ensured, and distortion of competition is excluded. (6) Decision No 1/2022 of the Joint Committee of 9 December 2022has amended Annex IV to the Agreement with respect to security markings. To avoid misunderstandings and confusion, it is appropriate to further amend that Annex in order to clarify the meaning of sensitive information with a high confidentiality and integrity rating in the context of the Agreement, HAS ADOPTED THIS DECISION: Article 1 Annexes I and IV to the Agreement are replaced by the text set out in Annexes I and IV in the Appendix to this Decision. Article 2 This Decision shall enter into force on the date of its adoption. (1) OJ EU L 322, 7.12.2017, p. 3. (2) Decision No 2/2019 of the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems of 5 December 2019 amending Annexes I and II to the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems [2020/1359] (OJ EU L 314, 29.9.2020, p. 68). ELI: http://data.europa.eu/eli/dec/2024/301/oj 1/20EN OJ L, 25.1.2024 Done at Zürich, on 15 November 2023. For the Joint Committee Secretary for the European Union The Chair Secretary for Switzerland Ruben VERMEEREN Katrin SCHNEEBERGER Thomas MEIER 2/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 APPENDIX 1. Annex I is replaced by the following: ‘ANNEX I ESSENTIAL CRITERIA A. Essential criteria for stationary installations Essential criteria In the EU ETS In the ETS of Switzerland 1. Mandatory nature of the Participation in the ETS shall be mandatory Participation in the ETS shall be participation in the ETS for the installations carrying out the mandatory for the installations activities and emitting the greenhouse gases carrying out the activities and (“GHG”) listed below. emitting the GHG listed below. 2. The ETS shall cover at — Annex I to Directive 2003/87/EC, — Article 40(1) of and Annex 6 to least the activities set out as in force on the date of entry into force of the CO Ordinance, 2 in: this Agreement. as in force on 1 January 2022. 3. The ETS shall cover at — Annex II to Directive 2003/87/EC, — Article 1(1) of the CO Ordi­ 2 least the GHGs set out in: as in force on the date of entry into force of nance, this Agreement. as in force on 1 January 2022. 4. A cap shall be set for the — Articles 9 and 9a of Directive — Article 18(1) and (2) of the CO 2 ETS, which is at least as 2003/87/EC, Act stringent as the one in: as in force on the date of entry into force of — Article 45(1) of and Annex 8, this Agreement. point 1, to the CO Ordinance, 2 as in force on 1 January 2022. The linear reduction factor of 1,74 % per year will increase to 2,2 % per year as The linear reduction factor is 2,2 % from 2021 and will apply to all sectors in per year as from 2021. accordance with Directive (EU) 2018/410, as in force on the date of entry into force of this Agreement. 5. Market stability In 2015, the EU introduced the Market — Article 19(5) of the CO Act 2 mechanism Stability Reserve (Decision — Article 48(1bis) and (5) of and (EU) 2015/1814), the operation of which Annex 8, point 2, to the CO 2 was reinforced by Directive (EU) 2018/410. Ordinance, as in force on 1 January 2022. The EU legislation provides that, by 15 May each year and starting in 2017, the The Swiss legislation provides for a Commission is to publish the total number reduction in auction volume of allowances in circulation (TNAC). This conditional on the total number of figure determines whether some of the allowances in circulation. In addition, allowances intended to be auctioned should the emission allowances which are be placed into the reserve or be released not assigned to an auction are from the reserve. cancelled at the end of the trading period. ELI: http://data.europa.eu/eli/dec/2024/301/oj 3/20EN OJ L, 25.1.2024 Essential criteria In the EU ETS In the ETS of Switzerland 6. The level of market — Directive 2014/65/EU of the European — Federal Act on the Swiss Financial oversight of the ETS Parliament and of the Council Market Supervisory Authority shall be at least as of 15 May 2014on markets in financial of 22 June 2007 stringent as the ones in: instruments and amending Directive — Federal Act on Financial Market 2002/92/EC and Directive Infrastructures and Market Con­ 2011/61/EU (MIFID II) duct in Securities and Derivatives — Regulation (EU) No 600/2014 of the Trading of 19 June 2015 European Parliament and of the Council — Federal Act on Financial Institu­ of 15 May 2014on markets in financial tions of 15 June 2018 instruments and amending Regulation — Federal Act on Combating Money (EU) No 648/2012 (MIFIR) Laundering and Terrorist Finan­ — Regulation (EU) No 596/2014 of the cing of 10 October 1997, European Parliament and of the Council as in force on the date of the entry into of 16 April 2014on market abuse (mar­ force of this Agreement. ket abuse regulation) and repealing Swiss financial market regulation Directive 2003/6/EC of the European does not define the legal nature of Parliament and of the Council and Com­ emission allowances. In particular, mission Directives 2003/124/EC, emission allowances are not qualified 2003/125/EC and 2004/72/EC (MAR) as securities in the Financial Markets — Directive 2014/57/EU of the European Infrastructure Act and therefore are Parliament and of the Council not tradeable on regulated trading of 16 April 2014on criminal sanctions venues. Because emission allowances for market abuse (market abuse direc­ do not qualify as securities, Swiss tive) (CS-MAD) securities regulation does not apply to — Directive (EU) 2015/849 of the Euro­ OTC emission allowances trading on pean Parliament and of the Council secondary markets. of 20 May 2015 on the prevention of the use of the financial system for the Derivative contracts qualify as purposes of money laundering or ter­ securities according to the Financial rorist financing, amending Regulation Markets Infrastructure Act. This also (EU) No 648/2012 of the European Par­ includes derivatives that have liament and of the Council, and repeal­ emission allowances as their ing Directive 2005/60/EC of the Euro­ underlying instrument. OTC traded pean Parliament and of the Council and derivatives on emission allowances Commission Directive 2006/70/EC between non-financial as well as (AMLD), financial counterparties is covered by as in force on the date of the entry into force the provisions in the Financial Market of this Agreement. Infrastructure Act. 7. Cooperation regarding The Parties shall establish appropriate cooperation arrangements regarding market market oversight oversight. Those cooperation arrangements shall concern the exchange of information and the enforcement of obligations arising under their respective market oversight regime. The Parties shall inform the Joint Committee about any such arrangements. 8. The qualitative limits for No entitlements to use international credits No entitlements to use international international credits are provided for in Union law from 2021 credits are provided for in Swiss law shall be at least as onwards. from 2021 onwards. stringent as those set out in: 4/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential criteria In the EU ETS In the ETS of Switzerland 9. The quantitative limits No entitlements to use international credits No entitlements to use international for international credits are provided for in Union law from 2021 credits are provided for in Swiss law shall be at least as onwards. from 2021 onwards. stringent as those set out in: 10. Free allocation shall be — Articles 10, 10a, 10b and 10c of Direc­ — Article 18(3) and Article 19 of the calculated on the basis of tive 2003/87/EC CO Act 2 benchmarks and — Commission Implementing Regulation — Article 45(2) to (6) and Arti­ adjustment factors. (EU) 2021/447 of 12 March 2021 cles 46, 46a, 46b and 48 of and Allowances which are determining revised benchmark values Annex 9 to the CO Ordinance, 2 not allocated free of for free allocation of emission allowan­ as in force on 1 January 2022. charge shall be ces for the period from 2021 to 2025 In the period from 2021 to 2025, free auctioned or pursuant to Article 10a(2) of Directive allocations do not exceed the levels of invalidated. To that end, 2003/87/EC of the European Parlia­ free allocations given to installations the ETS shall meet at ment and of the Council, as applicable in the EU ETS. least: in the period from 1 January 2021 to 31 December 2025 — Directive (EU) 2018/410 of the Euro­ pean Parliament and of the Council of 14 March 2018amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814 — Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Arti­ cle 10a of Directive 2003/87/EC of the European Parliament and of the Council — Commission Delegated Decision (EU) 2019/708 of 15 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council concerning the determination of sectors and subsectors deemed at risk of carbon leakage for the per­ iod 2021 to 2030 — any cross-sectoral correction factor in the EU ETS in 2021-2025 or 2026-2030 — Commission Implementing Regulation (EU) 2019/1842 of 31 October 2019 laying down rules for the application of Directive 2003/87/EC of the Euro­ pean Parliament and of the Council as regards further arrangements for the adjustments to free allocation of emis­ sion allowances due to activity level changes, as in force on 1 January 2021. ELI: http://data.europa.eu/eli/dec/2024/301/oj 5/20EN OJ L, 25.1.2024 Essential criteria In the EU ETS In the ETS of Switzerland 11. The ETS shall provide for — Article 16 of Directive 2003/87/EC, — Article 21 of the CO Act 2 penalties in the same as in force on the date of entry into force of — Article 56 of the CO Ordinance, 2 circumstances and of this Agreement. as in force on 1 January 2022. the same magnitude as those set out in: 12. Monitoring and — Article 14 of and Annex IV to Directive — Article 20 of the CO Act 2 reporting in the ETS 2003/87/EC — Articles 50 to 53 of and shall at least be as — Commission Implementing Regulation Annexes 16, point 1, and 17, stringent as in: (EU) 2018/2066 of 19 December 2018 point 1, to the CO Ordinance, 2 on the monitoring and reporting of as in force on 1 January 2022. greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council and amending Commission Regulation (EU) No 601/2012, as in force on 1 January 2021. 13. Verification and — Article 15 of and Annex V to Directive — Articles 51 to 54 of the CO Ordi­ 2 accreditation in the ETS 2003/87/EC nance, shall at least be as — Commission Implementing Regulation as in force on 1 January 2022. stringent as in: (EU) 2018/2067 of 19 December 2018 on the verification of data and on the accreditation of verifiers pursuant to Directive 2003/87/EC of the European Parliament and of the Council, as in force on the date of entry into force of this Agreement. B. Essential criteria for aviation Essential criteria For the EU For Switzerland 1. Mandatory nature of the Participation in the ETS shall be mandatory Participation in the ETS shall be participation in the ETS for aviation activities in accordance with the mandatory for aviation activities in criteria listed below. accordance with the criteria listed below. 2. Coverage of aviation — Directive 2003/87/EC, as amended by 1. Scope of coverage activities and GHG and Regulation (EU) 2017/2392 of the Flights which arrive at, or depart attribution of flights and European Parliament and of the Council from, an aerodrome situated in the their respective of 13 December 2017 to temporarily territory of Switzerland, except emissions according to derogate enforcement in respect of flights which depart from an aero­ the departing flight flights to and from countries with drome situated in the territory of principle as set out in: whom an agreement pursuant to Arti­ the EEA. cle 25 of Directive 2003/87/EC has not been reached 6/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland — Commission Delegated Decision Any temporary derogations as re­ (EU) 2020/1071 of 18 May 2020 gards the scope of the ETS, such as amending Directive 2003/87/EC of derogations in the sense of Arti­ the European Parliament and of the cle 28a of Directive 2003/87/EC, Council, as regards the exclusion of may apply with regard to the ETS incoming flights from Switzerland of Switzerland in accordance with from the EU emissions trading system those introduced in the EU ETS. — Commission Delegated Regulation Only CO emissions shall be cov­ 2 (EU) 2019/1122 of 12 March 2019sup­ ered for aviation activities. plementing Directive 2003/87/EC of 2. Limitations of coverage the European Parliament and of the General coverage mentioned in Council as regards the functioning of point 1 shall not include: the Union Registry 1. Flights performed exclu­ as in force on 1 January 2021. sively for the transport on As from 1 January 2020, flights from an an official mission of a reign­ aerodrome situated in the territory of the ing monarch and his/her im­ European Economic Area (“EEA”) to mediate family, heads of aerodromes situated in the territory of State, heads of Government Switzerland shall be covered by the EU ETS, and Government ministers, while flights from aerodromes situated in where this is substantiated the territory of Switzerland to aerodromes by an appropriate status in­ situated in the territory of the EEA shall be dicator in the flight plan. excluded from the EU ETS, pursuant to 2. Military, customs and police Article 25a of Directive 2003/87/EC. flights. 3. Flights related to search and rescue, fire-fighting flights, humanitarian flights and emergency medical service flights. 4. Flights performed exclu­ sively under visual flight rules as defined in Annex 2 to the Convention on Inter­ national Civil Aviation of 7 December 1944. 5. Flights terminating at the aerodrome from which the aircraft has taken off and dur­ ing which no planned inter­ mediate landing has been made. ELI: http://data.europa.eu/eli/dec/2024/301/oj 7/20EN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland 6. Training flights performed exclusively in order to ac­ quire or maintain a licence, or a rating in the case of cock­ pit flight crew where this is substantiated by an appro­ priate remark in the flight plan, provided that the flight does not serve for the trans­ port of passengers and/or cargo or for the positioning or ferrying of the aircraft. 7. Flights performed exclu­ sively for the purpose of scientific research. 8. Flights performed exclu­ sively for the purpose of checking, testing or certify­ ing aircraft or airborne or ground-based equipment. 9. Flights performed by aircraft with a certified maximum take-off mass of less than 5 700kilograms. 10. Flights of commercial aircraft operators with total annual emissions lower than 10 000tonnes on flights cov ered by the ETS of Switzer land or fewer than 243 flights per period for three consecu tive four-month periods with in the scope of the ETS of Switzerland, if the operators are not covered by the EU ETS. 11. Flights of non-commercial aircraft operators covered by the ETS of Switzerland with total annual emissions lower than 1 000 tonnes in accordance with the respec tive derogation applied in the EU ETS, if the operators are not covered by the EU ETS. 8/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland These limitations of coverage are provided for in: — Article 16a of the CO Act 2 — Article 46d and Article 55(2) of and Annex 13 to the CO Ordi­ 2 nance, as in force on 1 January 2022. 3. Exchange of relevant The two parties shall cooperate regarding the application of the limitations of data regarding the coverage in the ETS of Switzerland and the EU ETS for commercial and non- application of the commercial operators in accordance with this Annex. In particular, both parties limitations of coverage shall ensure the timely transfer of all relevant data to enable correct identification of of aviation activities the flights and aircraft operators that are covered by the ETS of Switzerland and the EU ETS. 4. Cap (total quantity of — Article 3c of Directive 2003/87/EC, The cap shall reflect a similar level of allowances to be stringency as the one in the EU ETS, in as in force on the date of entry into force allocated to aircraft particular with regard to the of this Agreement. operators) reduction percentage rate between — Article 3c of Directive 2003/87/EC years and trading periods. The initially allocated allowances as follows: allowances in the cap shall be — 15 % auctioned allocated as follows: — 3 % set aside in a special reserve — 15 % shall be auctioned — 82 % allocated free of charge. — 3 % shall be set aside in a special Allocations were amended by Regulation reserve (EU) No 421/2014 whereby the allocation — 82 % shall be allocated free of of free allowances was reduced in charge. proportion to the reduction of the This allocation may be reviewed in surrender obligation (Article 28a(2) of accordance with Articles 6 and 7 of Directive 2003/87/EC). Regulation this Agreement. (EU) 2017/2392, as in force on the date of Up to 2020, the quantity of entry into force of this Agreement, has allowances within the cap shall be extended this approach until 2023, and calculated bottom-up on the basis of applies the 2,2 % linear reduction factor the allowances to be allocated free of from 1 January 2021. charge in accordance with the cap distribution as mentioned above. Any temporary derogations as regards the scope of the ETS shall require the corresponding proportional adjustments to the amounts to be allocated. As of 2021, the quantity of allowances within the cap shall be determined by the cap in 2020, taking into account a possible reduction percentage rate in accordance with the EU ETS. This is provided for in: — Article 18 of the CO Act 2 — Article 46e of and Annex 15 to the CO Ordinance, 2 as in force on 1 January 2022. ELI: http://data.europa.eu/eli/dec/2024/301/oj 9/20EN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland 5. Allocation of — Article 3d and Article 28a(3) of Direc­ Swiss emission allowances to be allowances for aviation tive 2003/87/EC, auctioned shall be auctioned by the through auctioning of as in force on the date of the entry into force Swiss competent authority. allowances of this Agreement. Switzerland is entitled to the revenues generated from the auctioning of Swiss allowances. This is provided for in: — Article 19a(2) and (4) of the CO 2 Act — Article 48 of and Annex 15 to the CO Ordinance, 2 as in force on 1 January 2022. 6. Special reserve for — Article 3f of Directive 2003/87/EC, Allowances shall be set aside in a certain aircraft as in force on the date of the entry into force special reserve for new entrants and operators of this Agreement. fast growers, except that up to 2020, given that the reference year for the acquisition of data for Swiss aviation activities shall be 2018, Switzerland will not have a special reserve. This special reserve is provided for in: — Article 18(3) of the CO Act 2 — Article 46e of and Annex 15 to the CO Ordinance, 2 as in force on 1 January 2022. 7. Benchmark for free — Article 3e of Directive 2003/87/EC, The benchmark shall be no higher allocation of allowances as in force on the date of the entry into force than the one in the EU ETS. to aircraft operators of this Agreement. The annual benchmark is The annual benchmark is 0,000642186914222035 0,000642186914222035 allowances per allowances per tonne-kilometre. tonne-kilometre. This benchmark is provided for in: — Article 46f(1) of and Annex 15 to the CO Ordinance, 2 as in force on 1 January 2022. 8. Free allocation of — Article 3e of Directive 2003/87/EC, The number of emission allowances emission allowances for as in force on the date of the entry into force allocated free of charge to aircraft aircraft operators of this Agreement. operators is calculated by multiplying its reported tonne-kilometre data Adjustments shall be made pursuant to performed in the reference year by the Article 25a of Directive 2003/87/EC, to the applicable benchmark. issuance of allowances in proportion to the corresponding reporting and surrendering This free allocation is provided for in: obligations resulting from the actual — Article 19a(3) and (4) of the CO 2 coverage under the EU ETS of flights Act between the EEA and Switzerland. 10/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland — Article 46f(1) and (3) of and Annex 15 to the CO Ordinance, 2 — as in force on 1 January 2022. 9. The qualitative limits for No entitlements to use international credits No entitlements to use international international credits are provided for in Union law from 2021 credits are provided for in Swiss law shall be at least as onwards. from 2021 onwards. stringent as those set out in: 10. Quantitative limits for No entitlements to use international credits No entitlements to use international the use of international are provided for in Union law from 2021 credits are provided for in Swiss law credits onwards. from 2021 onwards. 11. Acquisition of tonne- — Article 3e of Directive 2003/87/EC, Without prejudice to the provision kilometre data for as in force on the date of entry into force of below, the acquisition of new tonne- reference year this Agreement. kilometre data shall be done at the same time and using the same approach as the acquisition of tonne- kilometre data for the EU ETS. Until a new tonne-kilometre data acquisition is done, and in accordance with the Ordinance on the Acquisition of Tonne-Kilometre Data and the Preparation of Monitoring Plans relating to Distances covered by Aircraft, as in force on the date of entry into force of this Agreement, the reference year for the acquisition of data for Swiss aviation activities shall be 2018. This is provided for in: — Article 19a(3) and (4) of the CO 2 Act — Article 46f(1) of and Annex 15 to the CO Ordinance, 2 as in force on 1 January 2022. 12. Monitoring and — Article 14 of and Annex IV to Direc­ Monitoring and reporting provisions reporting tive 2003/87/EC shall reflect the same level of — Commission Implementing Regulation stringency as in the EU ETS. (EU) 2018/2066 of 19 December 2018 This is provided for in: on the monitoring and reporting of — Article 20 of the CO Act greenhouse gas emissions pursuant to 2 — Articles 50 to 52 of and Directive 2003/87/EC of the European Annexes 16 and 17 to the CO Parliament and of the Council and 2 Ordinance, amending Commission Regulation as in force on 1 January 2022. (EU) No 601/2012 ELI: http://data.europa.eu/eli/dec/2024/301/oj 11/20EN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland — Commission Delegated Regulation (EU) 2019/1603 of 18 July 2019sup­ plementing Directive 2003/87/EC of the European Parliament and of the Council as regards measures adopted by the International Civil Aviation Organisation for the monitoring, reporting and verification of aviation emissions for the purpose of imple­ menting a global market-based mea­ sure, as in force on 1 January 2021. 13. Verification and — Article 15 of and Annex V to Direc­ Verification and accreditation accreditation tive 2003/87/EC provisions shall reflect the same level — Commission Implementing Regulation of stringency as in the EU ETS. (EU) 2018/2067 of 19 December 2018 This is provided for in: on the verification of data and on the — Article 52(4) and (5) of and accreditation of verifiers pursuant to Annex 18 to the CO Ordinance, Directive 2003/87/EC of the European 2 as in force on 1 January 2022. Parliament and of the Council, as in force on the date of the entry into force of this Agreement. 14. Administration The criteria laid down in Article 18a of Switzerland shall be responsible for Directive 2003/87/EC shall apply. To this the administration of aircraft effect and pursuant to Article 25a of operators: Directive 2003/87/EC, Switzerland shall be — with a valid operating licence considered as an Administering granted by Switzerland, or Member State as regards the attribution of — with the greatest estimated attrib­ the administration of aircraft operators to uted aviation emissions in Swit­ Switzerland and EU (EEA) Member States. zerland under the linked ETS. Swiss competent authorities shall be Pursuant to Article 25a of Directive responsible for all the tasks related to 2003/87/EC, the competent authorities of the administration of aircraft the EU (EEA) Member States shall be operators attributed to Switzerland, responsible for all the tasks related to the including the tasks relating to the administration of aircraft operators attributed to them, including the tasks EU ETS (e.g. the reception of verified relating to the ETS of Switzerland (e.g. the emission reports covering both EU reception of verified emission reports and Swiss aviation activities, covering both EU and Swiss aviation administration of aircraft operators activities, administration of aircraft and accounts, compliance and operators and accounts, compliance and enforcement). enforcement). The Swiss competent authorities shall The European Commission shall agree agree bilaterally with the bilaterally with the Swiss competent European Commission on handing authorities on handing over the relevant over the relevant documentation and documentation and information. information. 12/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential criteria For the EU For Switzerland In particular, the European Commission In particular, the Swiss competent shall ensure the transfer to aircraft operators authorities shall transfer to aircraft administered by Switzerland of the amount operators administered by the EU of free allocation of EU allowances. (EEA) Member States the amount of free allocation of Swiss allowances. In case of a bilateral agreement regarding the administration of flights operating in This is provided for in: relation to the EuroAirport Basel- — Article 39(1bis) of the CO Act 2 Mulhouse-Freiburg not involving any — Article 46d of and Annex 14 to amendment to Directive 2003/87/EC, the the CO Ordinance, 2 European Commission shall, as as in force on 1 January 2022. appropriate, facilitate the implementation of such agreement, provided that this does not result in double counting. 15. Surrendering When assessing compliance of aircraft When assessing compliance of operators on the basis of the amount of aircraft operators on the basis of the surrendered allowances, the competent amount of surrendered allowances, authorities of the EU (EEA) Member States the competent authorities of shall first account for emissions covered by Switzerland shall first account for the ETS of Switzerland and use the emissions covered by the EU ETS and remaining amount of surrendered use the remaining amount of allowances to account for emissions surrendered allowances to account covered by the EU ETS. for emissions covered by the ETS of Switzerland. This is provided for in: — Article 55 (2bis) of the CO Ordi­ 2 nance, as in force on 1 January 2022. 16. Legal enforcement Parties shall enforce the provisions of their respective ETS in relation to aircraft operators that do not fulfil the obligations in the respective ETS, regardless of whether the operator is administered by an EU (EEA) competent authority or by a Swiss competent authority, in case enforcement by the authority administering the operator requires additional action. 17. Administrative Pursuant to Article 25a of Directive 2003/87/EC, the aircraft operator’s list attribution of aircraft published by the European Commission, in accordance with Article 18a(3) of operators Directive 2003/87/EC, shall specify the administering State, including Switzerland, for each aircraft operator. Aircraft operators attributed to Switzerland for the first time after the entry into force of this Agreement shall be administered by Switzerland after 30 April of the year of attribution and once the provisional registry link is operational. The two parties shall cooperate on sharing relevant documentation and information. The attribution of an aircraft operator shall not affect the coverage of that aircraft operator by the respective ETS (i.e. an operator covered by the EU ETS that is administered by the Swiss competent authority shall have the same level of obligations under the EU ETS alongside its coverage under the ETS of Switzerland, and vice versa). ELI: http://data.europa.eu/eli/dec/2024/301/oj 13/20EN OJ L, 25.1.2024 18. Modalities for Any further modalities needed for the organisation of the work and cooperation implementation within the one-stop shop for aviation account holders shall be developed and adopted by the Joint Committee after signature of this Agreement, in accordance with Articles 12, 13 and 22 of this Agreement. These modalities shall apply from the date that this Agreement applies. 19. Assistance from For the aviation part of this Agreement, the European Commission shall include Eurocontrol Switzerland within the mandate given to Eurocontrol in relation to the EU ETS. C. Essential Criteria for Registries The ETS of each Party shall include a registry and a transaction log, which shall meet the following essential criteria in relation to security mechanisms and procedures and in relation to the opening and management of accounts: Essential Criteria in relation to Security Mechanisms and Procedures The registries and the transaction logs shall protect the confidentiality, the integrity, the availability and the authenticity of the data stored in the system. To that end, the following security mechanisms shall be implemented by the Parties: Essential Criteria To access accounts, a two-factor authentication mechanism for all users accessing the account is required. A transaction signature mechanism is required for both initiation and approval of transactions. The confirmation code shall be sent out-of-band to the users. Any of the following operations shall be initiated by one person and approved by another person (4-eye principle): — all operations undertaken by an administrator, unless justified exceptions as defined in the LTS apply — all transfers of units unless justified by an alternative measure providing the same level of security. A system of notifications that alert the users when operations are performed involving their accounts and holdings shall be in place. A minimum of 24-hour delay applies between the initiation of a transfer and its execution to all the users to receive information and stop any suspected illegitimate transfer, unless a system of trusted accounts provides for the same level of security. The Swiss administrator and the Union central administrator shall take steps to inform users of their responsibilities with regard to the security of their systems (e.g. PC, network) and with regard to handling data/navigating on the internet. As regards compliance, and subject to the respective laws and regulations of the Parties, emissions may only be covered by allowances issued in the same period or before. Essential Criteria in relation to the Opening and Management of Accounts Essential Criteria Opening of an Operator Account/Operator Holding Account The application by the operator or competent authority to request the opening of an operator account/operator holding account shall be addressed to the national administrator (Federal Office of the Environment, FOEN, for Switzerland). The application shall contain sufficient information to identify the ETS installation and an appropriate installation ID. 14/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential Criteria Opening of an Aircraft Operator Account/Aircraft Operator Holding Account Each aircraft operator covered by the ETS of Switzerland and/or the EU ETS shall have one aircraft operator account/aircraft operator holding account. For aircraft operators administered by the Swiss competent authority such an account shall be held in the Swiss registry. The application by the aircraft operator or an authorised representative of the aircraft operator shall be addressed to the national administrator (FOEN for Switzerland) within 30 working days from the approval of the monitoring plan of the aircraft operator or its transferral from an EU (EEA) Member State to the Swiss authorities. The application shall contain the unique aircraft code(s) of the aircraft operated by the applicant which fall under the ETS of Switzerland and/or the EU ETS. Opening of a Trading Account/Personal Holding Account The application to request the opening of a trading account/personal holding account shall be addressed to the national administrator (FOEN for Switzerland). It shall include sufficient information to identify the account holder/applicant, and it shall include at least: — for a natural person: proof of ID and contact details — for a legal person: — copy of the commercial register, or — a document proving the registration of the legal entity and, if appropriate, the instrument establishing the legal entity — criminal records of the natural person or, if appropriate, for a legal person of its directors. Authorised/Account representatives Each account shall have at least one authorised/account representative who is nominated by the prospective account holder. The authorised/account representatives shall initiate transactions and other processes on behalf of the account holder. When nominating the authorised/account representative, the following information about the authorised/account representative shall be transmitted: — name and contact details — document supporting ID — criminal record. Checking of documents Any copy of a document submitted as evidence for the opening of a trading account/personal holding account or the nomination of an authorised/account representative must be certified as a true copy. Regarding documents issued outside the State requesting a copy, the copy must be legalised, except otherwise provided for by national law. The date of the certification and, where relevant, of the legalisation must not be more than three months prior to the date of the application. Refusal to open or update an account or to nominate an authorised/account representative A national administrator (FOEN for Switzerland) may refuse to open or to update an account or to nominate an authorised/account representative, provided that the refusal is reasonable and justifiable. The refusal shall be justified on at least one of the following grounds: — the information and documents provided are incomplete, out-of-date or otherwise inaccurate, or false — the prospective representative is under investigation or has been convicted in the preceding five years for fraud involving allowances or Kyoto units, money laundering, terrorist financing or other serious crimes for which the account may be an instrument — grounds set out in national or Union law. Regular review of account information The account holders shall report any change to the account or user data to the national administrator (FOEN for Switzerland) within 10 working days, supported by information as required by the national administrator who is responsible for the approval of the update of the information in a timely manner. ELI: http://data.europa.eu/eli/dec/2024/301/oj 15/20EN OJ L, 25.1.2024 Essential Criteria At least once every three years, the national administrator shall review whether the information related to an account remains complete, up-to-date, accurate and true, and shall request that the account holder notify any changes as appropriate. For Operator Accounts/Operator Holding Accounts, Aircraft Operator Accounts/Aircraft Operator Holding Accounts and verifiers, the review shall take place at least once every five years. Suspension of Access to Account Where any provision under Article 3 of this Agreement relating to registries is contravened or an investigation concerning a possible contravention of those provisions is pending, access to accounts may be suspended. Confidentiality and disclosure of information Information, including the holdings of all accounts, all transactions made, the unique unit identification code of the allowances and the unique numeric value of the unit serial number of the Kyoto units held or affected by a transaction, held in the EUTL or the SSTL, the Union Registry, the Swiss registry and any other Kyoto Protocol registry shall be considered confidential. Such confidential information may be provided to relevant public entities upon their request if such requests pursue a legitimate objective and are justified, necessary and proportionate for the purposes of investigation, detection, prosecution, tax administration, enforcement, auditing and financial supervision to prevent and combat fraud, money laundering, terrorism financing, other serious crime, market abuse or other breaches of Union or national law of an EEA Member State or Switzerland to ensure the good functioning of the EU ETS and the ETS of Switzerland. D. Essential Criteria for Auctioning Platforms and Auction Activities Entities conducting auctions of allowances in the ETS of the Parties shall meet the following essential criteria and shall conduct the auctions accordingly: Essential Criteria 1. The entity conducting the auction shall be selected through a process which ensures transparency, proportionality, equal treatment, non-discrimination and competition between different potential auction platforms on the basis of Union or national procurement law. 2. The entity conducting the auction shall be authorised for this activity and shall provide the necessary safeguards in the conduct of their operations; those safeguards include, among others, arrangements to identify and manage the potential adverse consequences of any conflict of interest, to identify and manage risks to which the market is exposed, to have transparent and non-discretionary rules and procedures for fair and orderly auctioning and sufficient financial resources to facilitate the orderly functioning. 3. Access to the auctions shall be subject to minimum requirements as regards adequate customer diligence checks to ensure that participants do not undermine the operation of the auctions. 4. The auction process shall be predictable, in particular as regards the timing and sequencing of sales and the estimated volumes to be made available. The main elements of the auctioning method, including the schedule, dates and estimated volumes of sales, shall be published on the website of the entity conducting the auction at least one month before the start of the auction. Any significant adjustment shall be announced as early as practicable in advance as well. 5. The auctioning of allowances shall be performed with the objective of minimising any impact on the ETS of each Party. The entity in charge of auctioning shall ensure that the auction clearing prices do not deviate significantly from the relevant price for allowances in the secondary market over the auctioning period, a situation which would indicate a deficiency of the auctions. The methodology determining the deviation referred to in the previous sentence should be notified to the competent authorities exercising market oversight functions. 16/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 Essential Criteria 6. All non-confidential information pertinent to the auctions, including all legislation, guidance and forms, shall be published in an open and transparent manner. The results of each auction conducted shall be published as soon as is reasonably practicable and include the relevant non-confidential information. Reports on the results of the auctions shall be published at least annually. 7. The auctioning of allowances shall be subject to adequate rules and procedures to mitigate the risk of anti- competitive behaviour, market abuse, money-laundering and terrorist financing in auctions. Such rules and procedures shall be, to the extent possible, not less stringent than those applicable to financial markets in the respective legal regimes of the Parties. In particular, the entity conducting the auction shall be responsible for putting in place measures, procedures and processes ensuring the integrity of the auctions. It shall also monitor the behaviour of market participants and notify the competent public authorities in the event of anti- competitive behaviour, market abuse, money laundering or terrorist financing. 8. The entity conducting the auctions and the auctioning of allowances shall be subject to adequate supervision by competent authorities. Designated competent authorities shall have necessary legal competences and technical arrangements to supervise: — the organisation and conduct of operators of auction platforms — the organisation and conduct of professional intermediaries acting on behalf of clients — the behaviour and transactions of market participants, in order to prevent insider dealing and market manipulation — the transactions of market participants, in order to prevent money laundering and terrorist financing. To the extent possible, the supervision shall not be less stringent than the supervision on financial markets in the respective legal regimes of the Parties. Switzerland shall endeavour to make use of a private entity for the auctioning of its allowances, in accordance with public procurement rules. Until such an entity is contracted, and provided that the number of allowances to be auctioned in a year is below a fixed threshold, Switzerland may continue to use the current arrangements for auctioning, namely the auctions operated by the FOEN, under the following conditions: 1. The threshold shall be 1 000 000allowances, including allowances to be auctioned for aviation activities. 2. The essential criteria 1 to 8 shall apply, with the exception of criteria 1 and 2, while the last sentence of criterion 5, and criteria 7 and 8 only apply to the FOEN to the extent possible. The essential criterion 3 shall apply, together with the following provision: admission to bid in auctions of Swiss allowances under the arrangements for auctioning which were in place at the time this Agreement was signed, shall be guaranteed for all entities in the EEA which are admitted to bid in auctions in the Union. Switzerland may mandate entities conducting the auction which are located in the EEA.’. 2. Annex IV is replaced by the following: ELI: http://data.europa.eu/eli/dec/2024/301/oj 17/20EN OJ L, 25.1.2024 ‘ANNEX IV DEFINITION OF ETS SENSITIVITY LEVELS A.1 – Confidentiality and Integrity rating “Confidentiality” means the reserved nature of information or of all or part of an information system (such as algorithms, programmes and documentation) to which access is limited to authorised persons, bodies and procedures. “Integrity” means the guarantee that the information system and the processed information can be altered only by deliberate and legitimate action and that the system will produce the expected result accurately and in full. For each piece of ETS information that is considered to be sensitive, the confidentiality aspect has to be considered from the potential impact at business level where this information is disclosed and the integrity aspect has to be considered from the potential impact at business level where this information is unwillingly modified, partially or totally destroyed. The level of confidentiality of information and the level of integrity of an information system shall be rated following an assessment based on the criteria contained in section A.2. Those ratings allow the global sensitivity level of the information to be evaluated by means of the mapping table provided in section A.3. A.2 – Confidentiality and Integrity rating A.2.1 – “Low rating” A low rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause moderate damage to the Parties or other institutions which, in turn, would be likely to: — moderately affect political or diplomatic relations; — cause local negative publicity to the image or reputation of the Parties or other institutions; — cause embarrassment to individuals; — affect staff morale/productivity; — cause limited financial loss or, moderately facilitate improper gain or advantage for individuals or companies; — moderately affect the effective development or operation of the Parties’ policies; — moderately affect the proper management of the Parties and their operations. A.2.2 – “Medium rating” A medium rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause damage to the Parties or other institutions which, in turn, would be likely to: — cause embarrassment to political or diplomatic relations; — cause damage to the image or reputation of the Parties or other institutions; — cause distress to individuals; — cause consequential reduction in staff morale/productivity; — embarrass the Parties or other institutions in commercial or policy negotiations with others; — cause financial loss or facilitate improper gain or advantage for individuals or companies; — affect the investigation of crime; — breach legal or contractual obligations on confidentiality of information; — affect the development or operation of the Parties’ policies; — affect the proper management of the Parties and their operations. 18/20 ELI: http://data.europa.eu/eli/dec/2024/301/ojEN OJ L, 25.1.2024 A.2.3 – “High rating”(1) A high rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause catastrophic and/or unacceptable damage to the Parties or other institutions which, in turn, would be likely to: — adversely affect diplomatic relations; — cause substantial distress to individuals; — make it more difficult to maintain the operational effectiveness or security of Parties or other contributors’ forces; — cause financial loss or facilitate improper gain or advantage for individuals or companies; — breach proper undertakings to maintain the confidentiality of information provided by third parties; — breach statutory restrictions on disclosure of information; — prejudice the investigation or facilitate the commission of crime; — disadvantage the Parties in commercial or policy negotiations with others; — impede the effective development or operation of the Parties’ policies; — undermine the proper management of the Parties and their operations. A.3 – ETS Sensitive information level assessment Based on the ratings for Confidentiality and for Integrity pursuant to section A.2 and in accordance with the sensitivity levels pursuant to Annex III to this Agreement, the global information sensitivity level is established using the following mapping table: Confidentiality rating Low Medium High Integrity rating Low Marking EU: Marking EU/CH: Marking EU/CH: SENSITIVE: ETS Joint SENSITIVE: ETS SPECIAL HANDLING: ETS Procurement Critical (or(*) Marking CH: Marking EU: LIMITED: ETS SENSITIVE: ETS Joint Procurement Marking CH: LIMITED: ETS) Medium Marking EU/CH: Marking EU/CH: Marking EU/CH: SENSITIVE: ETS SENSITIVE: ETS SPECIAL HANDLING: ETS Critical (or(*) (or(*) Marking EU: Marking EU/CH: SENSITIVE: ETS Joint SPECIAL HANDLING: ETS Procurement Critical) Marking CH: LIMITED: ETS) (1) As a matter of clarification, the wording under this point, A.2.3., only concerns “sensitive information” within the meaning of Articles 8 and 9 of this Agreement, even if it is almost identical with the wording used to define classified information in Commission Decision (EU, Euratom) 2019/1962 of 17 October 2019 on implementing rules for handling RESTREINT UE/EU RESTRICTED information (OJ EU L 311, 2.12.2019, p. 21). ELI: http://data.europa.eu/eli/dec/2024/301/oj 19/20EN OJ L, 25.1.2024 High Marking EU/CH: Marking EU/CH: Marking EU/CH: SPECIAL HANDLING: SPECIAL HANDLING: ETS SPECIAL HANDLING: ETS Critical Critical ETS Critical (*) Possible variation to be assessed on a case-by-case basis.’. 20/20 ELI: http://data.europa.eu/eli/dec/2024/301/oj