It’s great to go green and it’s laudable to go local. But don’t you dare try to do both at once.
That’s the message the World Trade Organization sent this week went it ruled — again — that Ontario’s Green Energy Act illegally discriminated against international renewable energy companies. Similar green jobs programs in other countries might also have to be disbanded following the ruling.
The Green Energy Act aims to reduce greenhouse gas emissions while encouraging energy conservation and fostering a jobs-rich renewable energy sector. Under the controversial elements of the act, electricity suppliers could charge premium prices for clean energy, but only if they produced that electricity using a certain amount of locally manufactured equipment like solar panels.
The European Union and Japan protested to the international trade body, claiming that the program illegally discriminated against their manufacturers. The WTO sided with the E.U. and Japan in a November ruling. Ontario appealed against that ruling, and on Monday the WTO rejected the appeal [PDF] while making some minor tweaks to its earlier ruling. From the Toronto Star:
The province will have to bring its rules into line with WTO rules or risk a claim for trade sanctions against Canada.
Ontario energy minister Bob Chiarelli said the province will talk to the federal government before deciding what to do.
“The big question is, to what extent will it impact on job creation? We’re assessing that,” Chiarelli told reporters, saying that 31,000 jobs have been created through the Green Energy Act. Many of those were short-term construction jobs, but others are in plants that make renewable energy equipment. The Liberal government promised the green legislation would create 50,000 jobs.
The implications of the ruling could be sweeping. Governments all around the world have coupled green energy efforts with incentives to strengthen local cleantech industries, and those programs could now be vulnerable to similar challenges. Even programs that aim to strengthen local economies but have nothing to do with renewable energy could be affected. From Reuters:
Canada’s defeat may spur more WTO disputes by countries which are desperate for economic growth and suspect their firms are being illegally locked out of infrastructure projects abroad.
The United States has already charged India with illegally favouring local producers in its solar sector and China has hit the EU with a claim that Greece and Italy favoured solar power firms that bought local components.
Other potential disputes are simmering, with Brazil, Indonesia, Nigeria, Russia, Ukraine and the United States all under scrutiny in sectors such as energy, mining, carmaking and telecoms.
So much for think globally and act locally.
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