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Swiss CO₂ Act Grant: What to expect

Christian Koller

Senior Manager, Global Grants, Credits & Incentives | EY Switzerland

8 minute read 23 Oct 2026
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The first application round under Switzerland’s transformative industrial decarbonization funding program closed in March 2026. Funding decisions are expected towards the end of 2026. While the market awaits the first successful projects, the program’s published eligibility and evaluation criteria already provide valuable insight into the types of investments best placed for future funding rounds.

In brief

  • The Swiss CO₂ Act Grant is a new source of industrial decarbonization funding for operators of installations that are required to participate in the Swiss emissions trading system (ETS).
  • Projects must make a substantial contribution to decarbonizing the ETS installation. The technology does not need to be innovative per se, but the impact, additionality and business case must be evidenced.
  • Companies can prepare now by screening their CAPEX pipelines, prioritizing projects against the published criteria and developing decision-grade technical, emissions and financial evidence before the next 31 March deadline.

For funding, tax, sustainability, engineering and management teams, the question is not simply whether a project could be eligible. It is which projects in the investment pipeline combine the strongest eligibility, evidence base and competitive potential, and whether funding could move those projects beyond internal return thresholds or accelerate their implementation.

What is the Swiss CO₂ Act Grant?

The Swiss CO₂ Act Grant is a new federal funding program under Article 37b of the CO₂ Act. It uses proceeds from the auctioning of emission allowances to support measures that make a substantial contribution to decarbonizing industrial installations that are mandatorily covered by the Swiss Emissions Trading System (ETS). The program was introduced under the revised CO₂ Act from 2025, with the first annual application round taking place in 2026.[1]

Its focus differs from support under the Climate and Innovation Act (CIA) (Klima- und Innovationsgesetz (KIG)). The KIG grant supports innovative technologies and processes. Article 37b instead centers on the scale and quality of the decarbonization contribution. A project therefore does not need to be novel per se, although it must still meet the program’s eligibility, additionality, evidence and timing requirements.[1]

This distinction may open a meaningful funding route for mature industrial investments that reduce emissions substantially but are not positioned primarily as technology innovation. In practice, the funding case must show why public support is decisive, for example because the project would otherwise not proceed, would be smaller or would be implemented later.[1]

You do not need a breakthrough technology to qualify. What matters is delivering meaningful decarbonisation. That creates opportunities for more mature projects.

Markus Fischer

Senior Consultant, EY Switzerland

Which companies are eligible?

Only operators of installations that are required to participate in the Swiss ETS under Article 16 of the CO₂ Act can apply. Operators that have opted out of mandatory participation and operators that participate voluntarily are not eligible for funding.[1]

Where a company intends to seek support for several independent measures, each measure requires a separate application. Applications submitted after project implementation has started are rejected, subject to a narrowly framed possibility for the Swiss Federal Office for the Environment (FOEN) to authorize an earlier start in justified cases.[1]

Which projects appear most relevant and competitive?

Projects appear most relevant when they combine substantial, measurable emissions reductions with a credible implementation plan and a clear need for financial support. The published rules are technology-neutral in their main test, which allows companies to begin with the full decarbonization CAPEX pipeline rather than a narrow list of preferred technologies.[1]

The guidance nevertheless identifies clear boundaries. Switching from one fossil fuel to another, replacing equipment with technology that is not state of the art, certain district-heating and reserve-power measures, and carbon capture and utilization in which the captured CO₂ is later re-emitted are among the measures that do not qualify as making a substantial contribution. Research, development, education and information measures are also excluded.[1]

What is required to win funding?

A competitive application must turn “substantial contribution” into a coherent, quantified and verifiable case. FOEN requires a plausible explanation of how the measure materially decarbonizes the ETS installation and evidence that it does not fall into an excluded category. The guidance does not set a single universal percentage threshold for substantial contribution, so the strength of the case depends on the project’s narrative and its position against the published assessment criteria.[1]

How is a substantial contribution assessed?

The program combines an eligibility gateway with comparative prioritization. First, the project must make a substantial contribution at the installation level. A strong application requires credible and quantified evidence on emissions reductions, business case, allowable costs and implementation.

If applications exceed the available annual resources, eligible applications are ranked. Half of the weighted score concerns the requested grant amount in CHF per ton of expected emissions reduction or negative emissions. Further criteria consider the percentage reduction in site emissions, carbon leakage exposure and the change in wider environmental impacts.[1]

How EY can help

Applicants should also prepare for scrutiny. FOEN may ask for additional information, request a presentation of complex projects, require independent verification of the expected emissions impact or ask for a confirmation of allowable costs by a suitable verifier. Strong applications should therefore be built from auditable evidence rather than optimistic assumptions.[1]

What evidence is required for a Swiss CO₂ Grant application?

Applicants need a measure description, implementation timing, return on investment analysis, quantified emissions impact, allowance effects, allowable-cost calculation, environmental-impact information and signed confirmation. Core assumptions should be realistic, conservative and supported by reliable sources.[1]

How much funding is available and which costs are eligible?

Financial assistance can cover up to 50% of allowable costs, which are defined as the investment costs directly necessary for an economical and appropriate implementation of the measure. They may include capitalizable planning costs, project components, installation, commissioning including justified operational interruptions, and reasonable civil-engineering costs.[1]

Article 37b funding may generally be combined with other public or third-party support, subject to the applicable cumulation rules and provided that the combined funding does not result in overcompensation of the eligible costs.[1]

What is the total funding pool?

The total annual funding pool is not fixed in the published applicant guidance. It is linked to proceeds from auctioned emission allowances and therefore varies. The 2025 Swiss ETS auction revenues were estimated to be approximately CHF 75 million, indicating a yearly multi-million upper funding envelope.[2]

If eligible applications exceed the funding available for a given calendar year, the published priority criteria will apply. Where sufficient funding is available, all applications meeting the formal and substantive eligibility requirements may receive support, subject to any applicable funding reductions.[1]

How can companies prepare for the next application cycle?

Companies should begin before the application window by converting their decarbonization and CAPEX pipelines into a prioritized funding portfolio. Complete applications are due annually by 31 March through FOEN’s CORE system, and only measures whose implementation is planned within the next two years can be submitted.[1]

1. Screen broadly: review planned investments across Swiss ETS installations, including projects that are mature rather than necessarily innovative.

2. Prioritize objectively: compare potential projects against the substantial-contribution test and, where competition is likely, against cost per ton, site-level impact, carbon leakage and environmental criteria.

3. Protect timing: identify procurement decisions, major purchase commitments and internal approvals that could constitute the point of no return.

4. Build the evidence early: align engineering data, emissions baselines, lifetime assumptions, CAPEX estimates, operating impacts and the financial model.

5. Test the incentive effect: demonstrate clearly whether funding changes the go or no-go decision, scale or timing of the investment.

6. Create an application workplan: assign accountable owners across funding, tax, sustainability, engineering, project development, finance and management.

Industrial decarbonization and energy independence is increasingly becoming a capital allocation question. Companies that connect their decarbonization roadmap with available funding opportunities can improve project economics, accelerate implementation and unlock investments that may otherwise struggle to compete for capital.

Mark Veser

Partner, EY Switzerland

How EY can support assessment and application

The strongest opportunity often begins before an application is drafted. EY teams can support companies through a three-step approach:

three step approach

How EY can help

A structured assessment can reduce the risk of investing heavily in a weak candidate and reveal projects where funding could improve the investment case, accelerate delivery or enable a larger emissions-reduction scope. A focused deeper dive then supports an evidence-based go or no-go decision before resources are committed to application execution.

Summary

Switzerland’s new CO₂ Act Grant covers up to 50% of eligible investment costs for high-impact decarbonization projects. With the first funding decisions expected by the end of 2026, companies should already screen their CAPEX pipelines, protect project timing and build robust technical, emissions and financial evidence. Early preparation improves competitiveness and accelerates investments that may otherwise struggle to meet internal return thresholds.


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About this article

Christian Koller
Senior Manager, Global Grants, Credits & Incentives | EY Switzerland
Christian supports clients in identifying, securing and optimizing government incentives across multiple jurisdictions and industries, helping organizations fund innovation, accelerate growth and maximize investment returns.
Related topics
Tax
Tax planning
Tax controversy
Tax transparency
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Global trade
Tax compliance

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