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Canada–Renewable Energy: Implications for WTO Law on Green and Not-So-Green Subsidies

Author

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  • Charnovitz, Steve
  • Fischer, Carolyn

    () (Resources for the Future)

Abstract

In the first dispute on renewable energy to come to World Trade Organization (WTO) dispute settlement, the domestic content requirement of Ontario’s feed-in tariff was challenged as a discriminatory investment-related measure and as a prohibited import substitution subsidy. The panel and Appellate Body agreed that Canada was violating the GATT and the TRIMS Agreement. But the SCM Article 3 claim by Japan and the European Union remains unadjudicated, because neither tribunal made a finding that the price guaranteed for electricity from renewable sources constitutes a ‘benefit’ pursuant to the SCM Agreement. Although the Appellate Body provides useful guidance to future panels on how the existence of a benefit could be calculated, the most noteworthy aspect of the new jurisprudence is the Appellate Body’s reasoning that delineating the proper market for ‘benefit’ analysis entails respect for the policy choices made by a government. Thus, in this dispute, the proper market is electricity produced only from wind and solar energy.

Suggested Citation

  • Charnovitz, Steve & Fischer, Carolyn, 2014. "Canada–Renewable Energy: Implications for WTO Law on Green and Not-So-Green Subsidies," Discussion Papers dp-14-38, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-14-38
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    References listed on IDEAS

    as
    1. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
    2. Carolyn Fischer & Mads Greaker & Knut Einar Rosendahl, 2014. "Robust Policies against Emission Leakage: The Case for Upstream Subsidies," CESifo Working Paper Series 4742, CESifo Group Munich.
    3. Buen, Jorund, 2006. "Danish and Norwegian wind industry: The relationship between policy instruments, innovation and diffusion," Energy Policy, Elsevier, vol. 34(18), pages 3887-3897, December.
    4. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
    5. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?," International Review of Environmental and Resource Economics, now publishers, vol. 4(1), pages 51-92, June.
    6. Arthur van Benthem & Kenneth Gillingham & James Sweeney, 2008. "Learning-by-Doing and the Optimal Solar Policy in California," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 131-152.
    7. Fischer, Carolyn & Newell, Richard G. & Preonas, Louis, 2013. "Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes," Discussion Papers dp-13-20, Resources For the Future.
    8. Schmidt, Robert C. & Marschinski, Robert, 2009. "A model of technological breakthrough in the renewable energy sector," Ecological Economics, Elsevier, vol. 69(2), pages 435-444, December.
    9. Aaron Cosbey & Petros C. Mavroidis, 2014. "A Turquoise Mess: Green Subsidies, Blue Industrial Policy and Renewable Energy: the Case for Redrafting the Subsidies Agreement of the WTO," RSCAS Working Papers 2014/17, European University Institute.
    10. Petros C. Mavroidis, 2014. "A Turquoise Mess: Green Subsidies, Blue Industrial Policy and Renewable Energy: the Case for Redrafting the Subsidies Agreement of the WTO," EUI-RSCAS Working Papers p0368, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    11. Carolyn Fischer & Richard G. Newell & Louis Preonas, 2014. "Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes," CESifo Working Paper Series 4757, CESifo Group Munich.
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    More about this item

    Keywords

    feed-in tariff; renewable energy; subsidies; international trade; WTO; green growth; local content requirement;

    JEL classification:

    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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