WTO faults Ontario on renewable energy complaint from EU and Japan

Geneva, Switzerland -- World Trade Organization judges largely backed complaints by the European Union and Japan against Canada over subsidies the province of Ontario gives to renewable-energy producers that use domestic technology, according to the Sierra Club and Public Citizen.

Under Ontario’s feed-in tariff program, created by the province’s Green Energy Act, above-market rates are paid to producers of renewable energy provided it is generated with a certain percentage of Canadian-made equipment. The act was designed to help Ontario meet its goal of shutting all its coal- power generators by 2014.

A provision of the program that began in October 2009 requires projects to use goods and labor from Ontario for as much as 60 percent of supply costs, depending on the type of renewable-energy source.

WTO judges agreed with the EU and Japan that provisions of the program discriminate against foreign suppliers of equipment and components for renewable-energy generation facilities by affording less favorable treatment to imported equipment and components than given to like-products originating in Ontario, according to the Sierra Club and Public Citizen. Judges rejected the EU and Japanese argument that the program provisions constitute an illegal subsidy.

Punching Bag

“As countries take steps to address the climate crisis, the last thing we need is the WTO interfering with innovative climate programs,” Ilana Solomon, the Sierra Club’s trade representative, said in an e-mailed statement. “Ontario’s solar and wind incentives program seeks to reduce dangerous carbon pollution and create clean-energy jobs, and it should serve as a model for other countries, not a punching bag.”

The confidential ruling was given to the involved governments. A WTO spokesman in Geneva declined to comment.

The complaints stoked a broader debate over plans by countries including Canada, the U.S. and China to reserve public works as well as energy and environmental projects worth billions of dollars for local companies. Japan’s Trade Policy Bureau has said it is “seriously concerned about a proliferation of such protectionist measures all over the world.”

The Sierra Club and Public Citizen said they were “particularly disappointed” that the U.S. weighed in on the complaint by submitting a brief arguing that Ontario’s program violated WTO rules.

Government Role

“Instead of attacking another country’s clean energy program, the U.S. government should focus on how we will build on our own solutions to tackle the climate crisis and create clean-energy jobs,” Solomon said.

Canada argued that governments have a role in securing a stable supply of electricity for the public benefit and securing renewable electricity to help protect the environment, and that Ontario’s program helps achieve these goals.

EU exports to Canada in wind-power and photovoltaic power- generation equipment are “significant,” according to the Brussels-based European Commission, ranging from 300 million euros ($384 million) to 600 million euros between 2007 and 2009.

Copyright 2012 Bloomberg

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