The move represents "the first time that the EU seeks a connection with an existing such scheme," EU ministers said in a statement.
When negotiations are concluded, the agreement will have to find final approval from the European Parliament and the EU Council of Ministers, which represents the 27 EU member countries.
The ETS is the world’s largest greenhouse gas emissions market, with a value of 28 billion euros in 2007. It was recently expanded to include other countries in the European Economic Area such as Norway, Liechenstein and Iceland.
Bringing Switzerland into the scheme would spread economic incentives to reduce damaging carbon emissions to one of Europe’s most environmentally delicate regions.
Currently, Switzerland operates its own form of ETS as a voluntary alternative to a domestic fuel tax. Around 40 companies are reportedly involved in the scheme that covers some 6.9% of Switzerland’s annual 52 million tones of CO2 emissions.
Europe’s ETS currently applies to over 10,000 industrial installations with a neat heat excess of 20 megawatts (MW) in energy-intensive sectors, such as electricity and heat generation, metal production and chemicals.
Collectively, these account for close to half of the EU’s CO2 emissions and 40% of its total greenhouse gas emissions.
The ETS is a "cap and trade" system that caps the overall level of emissions allowed but within that limit, allows participants to buy and sell allowances to pollute as they require.
The allowances within the ETS are the "currency" of the carbon market. Each one gives the holder the right to emit one tonne of CO2. The cap put on the total number of allowances creates a market scarcity.
Controversially, permits have been given away free to carbon-intensive industries - to try to prevent them from relocating elsewhere – and they can also be offset to nominally climate-friendly investments in the developing world.
From 2012, the ETS will be extended to the aviation industry.
