Monday, January 14, 2013

Renewable energy support programs - Need for a new law?

Came across this recent paper titled "Governing Clean Energy Subsidies: What, Why, and How Legal?" on renewable energy programs and WTO law which was very similar to the analysis I had made in my paper.Tracing the various forms of support renewable energy programs get across the world and the rising tensions it causes in trade relations especially related to compatibility with WTO law, the authors have recommended some steps to address the issue:    

"Recommendation 1: International institutions with rules governing trade, energy flows and climate change need greater coordination.
A new framework for trade rules on clean energy subsidies could consider not only the adverse and non-adverse impacts on other countries, but also the purpose of the measure: energy access, boosting clean energy generation capacity, building a domestic manufacturing base, or expanding export potential. If subsidies were used, for instance, for extending grid connections to RE sources (whether project developers are domestic or foreign firms), they should not be challenged. Again, if subsidies were offered to acquire intellectual property for emerging clean energy technologies, no adverse impact is caused even as a country is able to expand its clean energy generation capacity. Currently, however, such exceptions are not explicitly permitted under WTO rules, and until these issues are resolved, such policies might continue to attract trade disputes. Therefore, there might be a case for clarifying rules for sustainable energy under future trade-related initiatives for sustainable energy, including possibly a separate agreement – a Sustainable Energy Trade Agreement (SETA) – that could set out key principles for what would be permissible subsidies, especially if they are for non-mercantilist purposes like increasing clean energy generation capacity or offering energy access.
Recommendation 2: Common metrics to count subsidies can help to increase transparency.
Unless clean energy subsidies are measured in a transparent manner, there could be greater danger of misinterpretation and potentially more trade disputes arising. Use governmental, intergovernmental (United Nations Sustainable Energy for All initiative) and non-governmental sources of information on clean energy subsidies but standardise them to enable inter-country comparisons.
Recommendation 3: The relationship between rationalising fossil-fuel subsidy programmes and the use of subsidies to promote clean energy sources should be further investigated.
The G-20 could be an ideal forum to undertake analysis and discuss this relationship.
Recommendation 4: Establish the purpose of government support.
Currently, no forum exists where governments can discuss their reasoning for clean energy support programmes.
Recommendation 5: Meanwhile, independent assessments of alleged adverse impacts of subsidy policies could reduce the threat of unilateral trade sanctions or other penalties.
These assessments could occur through WTO Trade Policy Reviews, at the Committee on Regional Trade Agreements, or the United Nations Industrial Development Organization. Such assessments could also examine the impact of subsidies in promoting clean energy research, development, deployment and commercialization." 
Experts have called for a new international legal framework for renewable energy within the WTO. WIll the rise in trade disputes in the renewable energy sector, the decision in the Canada Feed-in tariff case and growing importance of renewable energy in the energy mix of several countries force members to the negotiating table? Or with the Doha round faltering, is this too much to ask?

Hat tip to R.V.Anuradha for alerting me on this one!

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