Renewable energy subsidies and the WTO

What is it about?

Many governments provide subsidies to shift from ‘dirty’ but cheap fossil fuels to ‘clean’ but expensive renewable energy. Recently, public incentives in the renewable energy sector have been challenged through both dispute settlement procedures of the World Trade Organization and domestic countervailing duty investigations. One may expect that trade frictions in this field will intensify over time. This article argues that the Agreement on Subsidies and Countervailing Measures – a multilateral trade treaty on subsidization and anti-subsidy measures – should be revised to give more policy space to national authorities in implementing their low-carbon programmes. The Appellate Body made a few climate-friendly interpretations in Canada–Renewable Energy/Canada–Feed-In Tariff Program. It is now members’ turn to carry out meaningful rule-making reforms. This article explores some ways to ‘green’ the existing disciplines.

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Why is it important?

Most countries are investing in renewable energy projects, but current WTO law limits their freedom to do so. Thus, the time is ripe to 'green' WTO rules so as to enable governments to have more policy space in utilizing renewable energy.

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