Ontario Clean-Energy Subsidies Break Rules, WTO Panel Says

Louise Downing, Bloomberg
December 20, 2012 | 8 Comments

Ontario's subsidies for clean-energy producers that use local technology were ruled in breach of World Trade Organization regulations, supporting complaints by the European Union and Japan against Canada.

The province’s feed-in tariff, or FIT program, which pays above-market rates to generators of renewable energy that use Canadian-made equipment, undermines competition because it favors domestic products, according to a WTO panel report posted on the agency’s website today.

The federal government will appeal the decision, Kirby Dier, a spokeswoman for the Ontario Ministry of Energy, wrote in an e-mail. “Our position has always been that the FIT program is consistent with Canada’s obligations under the WTO agreements.”

The government’s Green Energy Act dictates that goods and labor from Ontario must account for 60 percent of supply costs at clean-power projects, depending on the type of renewable source. It’s aimed at helping the province meet a goal to shut all coal-fed generators by 2014 as it seeks to curb polluting emissions.

The panel agreed with the EU and Japan that parts of the program discriminate against foreign equipment suppliers, while remaining divided on whether the subsidies are illegal.

‘Ignore Ruling’

“My advice to the next premier of Ontario would be to ignore this ruling,” said John Bennett, executive director of Sierra Club Canada, an environmental organization. “We have to have the autonomy in our own country to develop technologies and industries to be to the best advantage of our own economy.”

Japan said it’s concerned other countries may follow suit and may appeal the illegal-subsidy issue.

“We want this to become a leading case so we can stop protectionism from spreading,” said Jun Kazeki, an official in charge of WTO issues at the Ministry of Economy, Trade and Industry.

The WTO ruling will probably hinder the development of renewable energy in Ontario and other jurisdictions that are developing similar programs, Bennett said. The government now has to determine what it can do to support and maintain momentum in its renewables industry, he said.

Lead image: Gavel and book via Shutterstock

8 Comments

Prasad B
February 14, 2013

I support the Ontario Feed-in-Tariff program. Any province or country has right to setup their own rules and regulations without interfering in other country or state's matters.
WTO cannot demand what/how things should be done.

dennis baker
December 22, 2012

The answer is quite simple, we use this ruling to export my technology!
In my opinion

We need to replace the fossil fuel power plants, the primary source of GHG. Now!

At a scale required to accomplish this task :

Ethanol starves people : not a viable option.

Fracking releases methane : not a viable option.

Cellulose Bio Fuel Uses Food Land : not a viable option

Solar uses food land : Not a viable option

Wind is Intermittent : Not a viable option

All Human and Agricultural Organic Waste can be converted to hydrogen, through exposure intense radiation!

http://www.huffingtonpost.com/social/DennisearlBaker/2012-a-breakthrough-for-r_b_1263543_135881292.html

The Radioactive Materials exist now, and the Organic waste is renewable daily.

Ending the practice of dumping sewage into our water sources.

Air, Water, Food and Energy issues, receive significant positive impacts .

Reducing illness / health care costs as well !

Dennis Baker

Penticton BC V2A1P9

ANONYMOUS
December 21, 2012

One of the disturbing ironies in all of this is that Mitsubishi is one of the complainants yet they have bought over 100MW of solar projects in Ontario and have provided project finance to others.

Douglas Hendren
December 21, 2012

The WTO represents the interests of "global capital", which has no national loyalties, nor cares for social or environmental consequences of its quest for profit. It is inevitable that nations developing long-term environmental and economic consciousness will collide with the body of law quietly constructed by the WTO in recent decades while we were sleeping. These laws are obstacles to responsible business and action, and deserve to be questioned and dismantled.

ANONYMOUS
December 21, 2012

The motivation seems clear - wind and solar in Ontario competes in the local hourly market against dirty coal plants in Ohio.

Gerry Wootton
December 21, 2012

The Ontario initiative provides incentives to electricity producers to use domestic suppliers. This is an efficient mechanism in that it only provides an incentive to producers that actually produce renewable energy and indirectly to equipment manufacturers that produce commercially viable products. The US approach consists of providing subsidies to equipment manufacturers whether or not they have a viable product to sell and to producers before they produce any power. The US is all about subsidies - when they subsidize domestic players, that's good - when someone else does it that's bad. One just has to do the stats on WTO cases to see that it's mostly a shill for US interests.
BTW - anyone is free to play in the Ontario market by negotiating a contract with OPA. The quid pro quo is that, in order to obtain a contract under the terms of FiT program, they must incorporate significant domestic content; otherwise, normal competitive rates apply.

Anatoly Arov
December 21, 2012

Fully support Ontario and any Municipality in the World doing the same. Buyer rules and Seller accomodates him in order to sell.
WTO better should fight Countries infringing IP rules of its own Members, it will be more productive for innovation around the World.

Chris Young
December 20, 2012

The Ontario Feed-in-Tariff program was open to investors from any jurisdiction.

Project developers from around the world were granted Contracts. One of the conditions of that contract was commitment to locally manufactured products.

There was nothing forcing a project developer to set up a project in Ontario, and therefore they freely chose to accept the terms of these contracts.

Similarly, manufacturers from around the world also set up in Ontario to meet the needs of these projects. Again... free choice to participate if they wanted.

As you look to the US market, there are trade sanctions against Chinese modules. In Europe, Trade action against differential tariff rates granting premiums to EU made solar modules.

This clearly indicates that Solar is big business, and here to stay.