Graphic by Courtenay Lewis
With the Paris Climate Agreement on the brink of entering into force and 2016 well on its way to being the hottest year ever recorded, you would think governments would be eager to support each other’s efforts to fight climate disruption. Instead, the U.S. and India are exploiting outdated trade rules to attack each other’s renewable energy programs.
Earlier this month, in a case brought by the U.S., the World Trade Organization ruled against India’s ambitious solar program for a second time, taking issue with buy-local policies that encourage local solar manufacturing. Just one week prior, India announced plans to retaliate with a WTO case against eight U.S. states’ use of similar buy-local programs to create local clean energy jobs.
The U.S. started this feud when it launched a 2014 WTO case against buy-local policies in India’s National Solar Mission, a core component of India’s contribution to the Paris Agreement. If the program’s ambitious goal of creating 100,000 megawatts of solar power by 2022 -- of which only 10 percent is slated to be covered by buy-local provisions -- becomes a reality, India would be one of the world’s largest solar energy producers.
In February 2016, a WTO panel ruled against the buy-local provisions in India’s solar program, arguing that they discriminated against imported solar components, while acknowledging that “imported cells and modules currently have a dominant share of the market...in India.” India appealed, and earlier this month the WTO once again ruled against India. The Appellate Body rejected India’s defense of the buy-local solar policies as fulfilling its commitment to “ensure ecologically sustainable growth” and “comply with its obligations relating to climate change.” India has no further option for appeal, and now must decide whether to alter its solar program to avoid WTO-authorized trade sanctions from the U.S.
In the meantime, India has launched a tit-for-tat WTO complaint against 11 buy-local clean energy programs in eight U.S. states. Here are some of the programs on the target list:
California: a successful statewide rebate program that includes incentives for wind energy technologies manufactured in California. The wind energy produced under the program has cut annual greenhouse gas pollution by more than 20,000 metric tons. India is also targeting Los Angeles’ Solar Incentive Program, which pays consumers for solar installations, including bonus payments for solar cells manufactured in Los Angeles. The goal of the buy-local incentive is “to promote local economic development through manufacturing and job creation within the City of Los Angeles and to reduce [solar] costs through increased volume and competition.”
- Connecticut: incentives for homeowners to install solar panels, with bonus payments for components that were made in-state. The program achieved its original target for new solar installations eight years ahead of schedule, spurring the legislature to multiply the target by 10. To date, the program has supported more than 16,000 solar projects.
- Delaware: renewable portfolio standards requiring utilities to scale up the use of renewable energy, with additional credits provided for solar and wind power in which a majority of the equipment was manufactured in-state. Delaware estimates that the program produces an annual reduction in climate emissions and pollution-related deaths that is worth more than $20 million.
- Massachusetts: grants for homes and businesses that install solar hot water systems, including a $200 bonus for the use of components manufactured in-state. The average building benefitting from the program has used solar heat for about half of the hot water consumed, cutting greenhouse gas emissions.
- Michigan: a renewable portfolio standard requiring utilities to generate 10 percent of their electricity from renewable sources by 2015, with additional credits given for renewable energy generated from equipment made in-state. Though the renewable portfolio standard has yet to be renewed, its first seven years contributed to a more than three-fold increase in Michigan’s renewable energy capacity and growth in the state’s clean energy jobs.
- Minnesota: financial incentives for residents and businesses to install solar modules or solar thermal projects that are made in-state. In its first three years, the program has supported more than 1,000 solar projects while fostering job creation at six Minnesota solar manufacturing plants.
- Washington: a program to encourage small-scale renewable energy production, with incentives for solar and wind components made in Washington. To date, the program has helped support more than 8,000 renewable energy projects. Thanks in part to the buy-local incentives, nearly 90 percent of the state’s recent solar installations have used components made in Washington, supporting the state’s growing solar manufacturing industry.
These dueling WTO cases show how decades-old trade rules threaten to undermine today’s generational challenge to tackle the climate crisis. We cannot get to 100 percent clean energy by using trade rules to undercut buy-local policies that create local clean energy jobs, help strengthen support for strong climate policies, and help lower the cost of clean energy over time by stimulating competition.
We need a new approach to trade that boosts, not hinders, climate action. To start with, both India and the U.S. should abandon these challenges to each other’s buy-local renewable energy programs. More broadly, WTO members should negotiate a “peace clause” that prevents future cases against such climate initiatives.
Unfortunately, the Trans-Pacific Partnership would take another step in the opposite direction, if Congress were to pass it, as the deal replicates the same anti-buy-local rules being used against renewable energy programs at the WTO.
Click here to ask your member of Congress to stand up for local clean energy jobs, say yes to climate-friendly trade, and vote no on the polluter-friendly TPP.