Swiss Federal Council Announces CHF 1.1 Billion Package to Support Businesses Amidst Rising Energy Costs

Bern, Switzerland – October 26, 2023 – The Swiss federal Council today unveiled a extensive CHF 1.1 billion (approximately $1.2 billion USD) package of measures designed to alleviate the financial burden on businesses grappling with soaring energy prices. The announcement comes as Swiss companies, notably those in energy-intensive sectors like manufacturing and food processing, face unprecedented cost pressures due to the ongoing energy crisis exacerbated by geopolitical instability.

The package includes several key components:

• CHF 600 million in subsidized loans: These loans, administered through the Swiss National Bank (SNB) and cantonal banks, will offer businesses access to affordable credit to cover energy costs. The interest rates will be capped at 3% above the SNB’s policy rate.
• CHF 300 million in direct subsidies: Direct financial assistance will be provided to companies facing acute hardship, with a focus on small and medium-sized enterprises (SMEs). Eligibility criteria will be determined by the cantons.
• CHF 200 million for energy efficiency improvements: Funding will be allocated to support investments in energy-saving technologies and measures,such as insulation,efficient lighting,and process optimization. The Federal Office of Energy (SFOE) will oversee this portion of the program.

Federal Councillor guy Parmelin, head of the Department of Economic Affairs, Education and Research (EAER), emphasized the urgency of the situation. “Swiss businesses are facing an existential threat from these energy costs. This package is a vital lifeline to help them navigate this tough period and preserve jobs,” he stated during a press conference in Bern. Parmelin specifically highlighted the impact on the food industry,noting potential price increases for consumers if businesses are unable to absorb the rising costs.

The Swiss Buisness Federation (economiesuisse) welcomed the Federal Council’s decision, but cautioned that it may not be sufficient to address the full extent of the crisis. Director General Christoph Meier stated, “While this is a positive step, we need to remain vigilant and prepared for further measures if energy prices continue to climb.”

Context: Switzerland’s Energy Landscape and Vulnerabilities

Switzerland relies heavily on imported energy, particularly electricity. Approximately 70% of its electricity is generated by hydropower, but production can fluctuate depending on rainfall and snowmelt. The country also imports significant amounts of natural gas from Germany and Norway. The current energy crisis has exposed switzerland’s vulnerability to disruptions in global energy markets.

In recent years, Switzerland has been actively pursuing a transition to renewable energy sources, but progress has been slow. The country’s energy strategy 2050 aims to phase out nuclear power and increase the share of renewables in the energy mix. Though,the implementation of