ENERGY TRANSITION AND PUBLIC FINANCES: A PROJECTION FRAMEWORK FOR SWITZERLAND.

This article examines the long-term fiscal impacts of climate mitigation policies designed to achieve net-zero greenhouse gas emissions in Switzerland by 2050. Using a novel budget-impact projection framework that incorporates four policy scenarios with varying mixes of carbon pricing, regulation, and subsidies, the study finds that these mitigation measures will exert significant pressure on public finances, primarily due to their negative effects on economic growth which reduce tax revenues and social security contributions. The federal government and social security funds are projected to be most affected, with a notable decline in revenues from fuel taxes caused by the electrification of transport, underscoring the importance of planned replacement levies on electric vehicles to offset these losses. Among the policy mixes, those relying heavily on subsidies impose the greatest fiscal burden, while a combination of carbon pricing and regulation performs somewhat better. The analysis does not account for the physical costs of climate change, which international studies suggest would exceed mitigation costs, indicating that the net benefits of achieving the net-zero target may outweigh the fiscal challenges identified.