Energy Systems and Technologies for the Coming Century ...

Trade Disputes over Renewable Energy Supporting Policies:Recent Cases, WTO Rules, and Possible SolutionsXianli ZhuRisø National Laboratory for Sustainable EnergyTechnical University of Denmark – DTUBuilding 142, P.O. Box 49, 4000 Roskilde, Denmarkxzhu@risoe.dtu.dkAbstract:Increasing concerns about climate change impacts and the high oil prices have mademany countries include promoting renewable energy use their national sustainabledevelopment strategies. One frequently mentioned barrier to increasing the transitiontoward renewable energy in many countries is lack of funding – in most cases energyfrom cleaner sources are also more expensive. And who pays for the GHG emissionreductions is the top reason behind the stalemate of the international climatenegotiations. Developing countries are requesting large financial support fromdeveloped countries for their climate change mitigation actions under the principle of‘common but differentiated responsibilities’. So it would be logic to assume that if acountry helps lower the prices of renewable energy technologies and somehowsubsidies the renewable energy use in other countries, such efforts will be more thanwelcome, even so when such effort comes from a developing country. But it is nottrue in real life. The longing for renewable energy sometimes gives way to countries’competition for leadership in clean technologies or companies’ competition for marketshares. In 2010 two trade disputes have arisen under the WTO, for wind energysupporting policies. Recently, Japan has a trade dispute against Canada related torenewable energy equipment in Ontario. The American United Steelworkers arecalling for their government to penalise China for grants to Chinese wind turbine andkey component manufacturers. This paper will examine the interfaces betweenvarious wind energy supporting policies and the WTO trade rules. Some tradedisputes will be used as case studies to explain the reasons behind such disputes.Suggestions will be provided on how to avoid such disputes in practice.Key words: wind energy, supporting policies, trade dispute, cases, solutionsI. IntroductionRenewable energy is taken as a new promising area for green growth, whichcombines the multiple benefits of clean energy supply, zero GHG emissions fromenergy production, job creation, as well as building national technical capacity fornew energy technologies. In the ten years from 2000 to 2010, the global market ofsolar PV and wind energy increased from 6.5 billion USD to 131.6 billion USD (CleanEdge Inc., 2011). The renewable energy sector has been growing must faster thanboth the world economy and the energy sector.Over 80 countries around the world have set targets for renewable energydevelopment. Despite continuing technology progress and declining in costs,renewable energy is still more expensive than fossil fuels. To boost the developmentof renewable energy and build their competitiveness in this new and promisingindustry, countries have introduced various supporting policies for the renewableenergy sector, from public funding for research and development, to higher tariffs forelectricity from renewable sources, mandatory grid connection and preference inRisø International Energy Conference 2011 Proceedings Page 87