Carbon credits abroad: Switzerland's strategy fails to take off

Switzerland was among the first countries to apply Article 6.2 of the Paris Agreement, which allows states to finance emission-reduction projects abroad and count the reductions toward their own national climate targets. Over the past ten years Bern has signed 16 bilateral agreements of this kind, aiming to cover up to a third of its 2030 climate target with credits generated outside its borders, known as ITMOs.

The Federal Office for the Environment has approved six projects so far, while another 28 are still under evaluation. The results remain modest: Switzerland has reached just 0.36% of its offsetting target abroad, out of a total of 34 million tonnes of CO2.

The main problem concerns the quality of the credits. Federica Dossi of the organisation Carbon Market Watch says Switzerland is trying to apply strict criteria, excluding fossil fuels, but the credits it is obtaining do not match expectations. She points to the electric bus project financed in Bangkok, where the quality of the reductions falls short, while Switzerland falls behind on its targets without an alternative plan.

These doubts echo the shortcomings of the previous mechanism under the Kyoto Protocol: a 2024 study published in Nature, which analysed 2,346 projects, found that less than 16% of the credits issued corresponded to real emission reductions, a share that fell to 11% for more efficient cookstove projects. This is exactly the type of project Switzerland is funding, for instance in Ghana, where NGOs say the credits granted exceed the reductions actually achieved. On the Bangkok project, the organisations Alliance Sud and Fastenaktion instead question additionality, arguing the buses would have been electrified by 2030 regardless. The KliK Foundation, which bought the certificates, dismisses the claim as mere speculation.

Cross-party criticism and a question of fairness

The doubts extend into federal politics too. Green Party national councillor Marionna Schlatter described the offsetting strategy as a “fallimento totale” (total failure), accusing the government of “sottrarsi alle proprie responsabilità” (shirking its own responsibilities). Social Democrat Nadine Masshardt warned that credits bought abroad often deliver smaller emission cuts than claimed. Even Christian Wasserfallen of the liberal FDP, a supporter of market-based solutions, acknowledged flaws in the current approach.

Matters are complicated by the scarcity of quality credits: Switzerland is competing with Singapore, Japan and the European Union for the same projects in Ghana, Peru and Thailand, raising concerns that wealthier countries will secure the cheapest, easiest reductions, leaving costlier measures to everyone else.

At home, Swiss emissions have fallen 22.3% compared with 1990 levels, far short of the 50% reduction target set for 2030. According to Juliette de Grandpré of the NewClimate Institute, the Swiss case shows a double weakness: an offsetting strategy that is not working, and insufficient domestic measures to cut emissions at home.

The underlying dilemma remains unresolved: raise the standards required of offsetting projects, an option many countries would resist, or require states to cut emissions mainly within their own borders. The Federal Office for the Environment said the government will assess progress toward the 2030 targets during 2027, and that it is working to develop a carbon market offering higher-quality offsetting projects.