In an agreement that took two years to negotiate, Peru will get finance for sustainable development projects while Switzerland takes credit for the emissions cuts. Switzerland has struck a carbon offsetting agreement with Peru, in what the two nations say is the first deal of its kind under Article 6 of the Paris agreement.
The deal signed on Tuesday allows Peru to fund sustainable development projects, while Switzerland gets to count the resulting emissions cuts against its national targets.
The agreement gives the Swiss government the option to transfer the rights to retire the offsets to local government or to private companies headquartered in Switzerland. The money for these projects comes from Swiss motor fuel importers. In practice, they can pass these costs on to their customers, who are charged a levy when filling up their cars. Transport accounts for around a third of the small, rich nation’s greenhouse gas emissions.
The transactions are to be managed by the Klik foundation, which was set up by the Swiss CO2 act to find 35-54 million tonnes worth of carbon offsets up to 2030. The Swiss and Peruvian governments will determine which activities are eligible to generate carbon credits. Klik’s international co-head Mischa Classen told Climate Home that it is considering initiatives like a $50m green credit line for small and medium-sized businesses to invest in energy efficiency and electric buses.
In 2015, Switzerland pledged to reduce its greenhouse gas emissions by 50% between 1990 and 2030. The government intends to meet up to a quarter of the goal through international offsets. According to Climate Watch Data, Switzerland’s GHG emissions reduced by 8% between 1990 and 2017.
Counting offsets towards reduction targets is controversial. While countries like Switzerland, Norway and Canada have indicated they will use them, others like Finland and the UK have said they will not. Peru is one of the Amazon nations and around half of its emissions come from land use, land-use change, and forestry.
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