Sheltering Government Support to ‘Green’ Electricity: The European Union and the World Trade Organization

Abstract

Since the Canada -Renewable Energy (2013) dispute at the World Trade Organization (WTO), the WTO Agreement on Subsidies and Countervailing Measures (SCM) has been the focal point of academic debate on the trade and environment interface, with a growing consensus that WTO subsidy rules need to be revisited with a view to securing 'policy space' for government support to renewable energy. This article explores whether, as suggested by some scholars, the European Union (EU)'s system of justifications for renewable energy aid could serve as a source of inspiration for the WTO. While this proposition may appear attractive at first sight, it is hardly conceivable, or even desirable, that the EU's approach to sheltering renewable energy government support could be transposed to the WTO. This is because the two systems of subsidy control are fundamentally different in both substantive and procedural terms and, importantly, these differences reflect distinct objectives and political/institutional contexts. Nonetheless, this comparative analysis is used to shed light on where the key challenges lay for the WTO in ensuring mutual supportiveness between international trade rules and climate change mitigation objectives. It is argued that the case for reviewing the SCM Agreement cannot be made by simply forging parallels with the EU's regulatory model, but needs to be carefully construed on the basis of a proper understanding of whether and how green policy space is actually constrained under the current WTO subsidy and trade remedy rules. However, this requires better information on existing WTO members' practice in relation to renewable energy subsidies, as well as on their environmental effectiveness and possible trade-distortive impact. In this sense, the most valuable lesson that the WTO can draw from the EU's regulatory experience is the imperative of improving the transparency and knowledge-enhancing side of its subsidy control system.

Practice of World Trade Organization Dispute Settlement Body (WTO DSB) on the issues of the support of the use of renewable energy sources

“…Необходимо обратить внимание, что поощрение производства «зеленой» электроэнергии (в частности, солнечной и ветровой энергии) продолжает оставаться в центре внимания государственной поддержки, причем наиболее распространенной формой поддержки является тариф на подачу (ФИТ), который предлагает долгосрочные гарантированные цены на возобновляемую электроэнергию, подаваемую в сеть [34]. Согласно Глобальной сети политики в области возобновляемых источников энергии (REN21), по состоянию на конец 2018 года в 111 государствах были созданы программы ФИТ (последние государства, принявшие программу ФИТ, являются Замбия и Вьетнам) [3].…”

Nihil novi sub sole:The Need for Rethinking WTO and Green Subsidies in Light ofUnited States – Renewable Energy

“…As renewable energy requires support schemes in order to be economically viable, these cases were seen by certain scholars as a sign that the WTO rules on subsidies had to be reviewed (Rubini, 2012, 2015a; Cosbey and Mavroidis, 2014; Marhold, 2017). Other scholars instead highlighted that the major issue in these subsidies cases was not the subsidy granted for promoting renewable energy but the local content measures attached to those schemes, which favored the sourcing of domestic equipment or inputs for the production of green energy (Hartmut, 2014; Marín Durán, 2018; Celli, 2019). These local content measures made the support schemes trade distorting and prohibited under Article III:4 GATT as well as under the TRIMs and the SCM agreement.…”