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 complained about 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. First, governments are recognizing the need to tackle the climate crisis and are increasingly putting in place policies that encourage the development and deployment of climate friendly technologies. Second, the United Nations Framework Convention on Climate Change (UNFCCC) has not reached an agreement on the future of the multilateral regime or to address potential conflicts with trade rules. 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 incentivizes 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.

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