Uncertainty in renewable energy promotion: IES researchers explore the compatibility of sustainability requirements with international trade law

At an expert conference at Oslo University on Friday 15 January, Prof. Harri Kalimo and researcher Filip Sedefov presented work that they, together with other IES researchers, conduct on the WTO compatibility of renewable energy promotion. Public support for renewable energies is widely recognised as a legitimate industrial policy tool for securing investments into greener energy production. However, doubt has been cast on whether these renewables subsidies are compatible with WTO law. The possible problems came forth in the WTO case known as Canada-Renewable Energy: the WTO Dispute Settlement Body (DSB) needed to decide on whether the subsidies given to renewable energy producers by Ontario were prohibited by the WTO’s Subsidies and Countervailing Measures agreement. The DSB focused specifically on the legal and economic question on what is the “relevant market” within which subsidies were distributed. The question on the relevant market is important, because it determines which products (i.e. suppliers of energy) are competitors. This, in turn, is decisive for assessing if the granted subsidies are distorting competition on the marketplace, Harri and Filip explained. They pointed out in the presentation that the WTO’s market definition issue is particularly thorny for the EU’s freshly reformed advanced biofuels regime (RED) and that it may have important repercussions on how the EU’s green energy sector can develop in the future.



Image by Lynn D. Rosentrater