World Trade Organization and the Environment

WTO Cases Challenge Clean Energy Policies

195 countries have ratified the United Nations Framework Convention on Climate Change, agreeing to lower greenhouse gas emissions to prevent dangerous levels of climate change. Yet in the past few years, there has been an alarming rise of cases at the World Trade Organization (WTO) and related institutions challenging renewable energy 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, in 2014 Ontario, Canada, had to remove local green energy incentives after Japan and the European Union challenged the program before the World Trade Organization (WTO). And in 2015, the WTO ruled against India and its national solar program in a dispute brought by the U.S. government. The U.S. government claimed that the Indian government was unfairly supporting its solar manufacturing industry by offering incentives for the local production of solar cells and modules.

As countries try to capture the benefits of the clean energy economy, including new economic opportunities, new investment, and the creation of new green jobs, governments are increasingly turning to trade rules to challenge one another's domestic renewable energy industries. As a result, climate policies are being judged at the WTO and similar venues based on trade law and policy with a strong "free market bias," rather than climate science and policy.

U.S. Challenges India's National Solar Program at the World Trade Organization

Trade rules are standing in the way of governments' efforts to combat climate change. In April 2014, the U.S. Trade Representative (USTR) requested a WTO panel investigation into India’s solar energy program. The U.S. argued that the buy-local rules in India’s solar program, which incentivize the domestic production of solar cells and models, violate international trade rules. Fifteen environmental organizations sent a letter to the USTR urging the U.S. to not move forward with a case against India. In August 2015, however, the WTO ruled against India and its solar program. India is expected to appeal this ruling. This trade case could threaten India’s ability to transition to a clean energy economy and ultimately threaten global efforts to combat climate change.

WTO 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.

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