Trade and Climate
Ensuring Trade Rules Don't Undermine Climate Policy
In the past year, we have witnessed an alarming rise of international trade and investment disputes related to renewable energy and climate policies. Governments are increasingly filing trade cases to challenge other governments' policies on, for example, subsidies, procurement, and performance requirements related to renewable energy. For example, Ontario, Canada, had to remove local green energy incentives after Japan and Europe challenged the program before the World Trade Organization. The U.S. is now claiming that India’s ambitious solar initiative violates international trade rules. And there are a number of trade disputes now between the United States and China that affect wind turbines, rare earth materials, and solar panels.
The proliferation of trade cases that challenge renewable energy policies stem from a number of reasons. Most importantly, governments are trying to capture the many benefits of the clean energy economy, including new economic opportunities, new investment, and the creation of new green jobs. Unfortunately, in trying to capture these benefits, governments are increasingly turning to trade rules to challenge one others' domestic renewable energy industries. As a result, climate policies are being judged at the World Trade Organization (WTO) and similar venues based on trade law and policy with a strong "free market bias," rather than climate science and policy.
US Challenges India's National Solar Program at the World Trade Organization
Trade rules should not stand in the way of governments' efforts to combat climate change. Yet in April 2014, the US Trade Representative (USTR) requested that a World Trade Organization panel investigate whether buy-local rules in India's solar program violate international trade rules. This trade case could threaten India’s ability to transition to a clean energy economy and ultimately threaten global efforts to combat climate change.
In advance of the US request, 15 environmental organisations sent a letter to the USTR with strong concerns and urged the U.S. to not move forward with the case. Read the letter here.
World Trade Organization Says Ontario Needs to Remove Key Renewable Energy Incentives in Feed-In Tariff Program
A feed-in tariff (FIT) program in Ontario, Canada that encourages investment in and production of renewable energy suffered a major loss after WTO challenges by the European Union and Japan. While the program had enjoyed success and acclaim in incentivizing the production of clean energy and the creation of green jobs -- both key elements of tackling the climate crisis--the WTO ruled that the "buy local" components of the program violated trade rules. As a result of the decisions, Ontario removed the local content requirements for large renewable energy procurements.
Read our letter to the US Trade Representative regarding a WTO challenge to Ontario's feed-in tariff program.
- Report: Dirty Deals: How Trade Talks Threaten to Undermine EU Climate Policies and Bring Tar Sands to Europe (July 17, 2014)
- Report: NAFTA: 20 Years of Costs to Communities and Environment (March 11, 2014)
- Letter to the US Trade Representative Regarding a WTO Challenge to Ontario's Feed-in Tariff Program (October 18, 2012)