| As a policy response to energy security concerns and climate change, the introduction of various domestic incentive measures to promote renewable energy (RE) has become increasingly common all over the world. Their primary aim is to level the playing field between conventional and RE sources, currently obstructed by the relatively high costs of RE technologies and also by subsidies on fossil fuels.The magnitude of subsidies available for the RE sector is growing worldwide, and the production of energy from RE sources is increasing rapidly which, along with the rise in demand for green energy, is leading to the emergence of new RE markets worldwide. This will result in the expansion of RE trade which could potentially lead to trade disputes.In this context, the question of the status of RE subsidies in WTO law is highly relevant--do the WTO rules on subsidies constrain climate protection policies pursued through policies for promoting RE, particularly subsidization? This paper is a synopsis of an extensive research project intended to address the above question.Chapter I seeks to identify a legally precise definition of the term subsidy in light of the WTO Agreement on Subsidies and Countervailing Measures (ASCM) amid the diverging views put forward by different members. Specific reference is made to the peculiarities of defining subsidies in RE markets. Chapter II then examines the'specificity'requirement as a prerequisite step for a country making a case in the WTO against subsidies, and also discusses the peculiarities of how to find subsidies'specific'in RE markets.In accordance with the definitions presented in Chapter I and Chapter II, different types of subsidies existing in RE markets in general are identified in Chapter III. In this chapter, instead of providing a run-down of the major subsidy schemes worldwide, incentive measures are classified into several categories according to the intricacy involved in capturing them by the ASCM and then the issues of whether such measures comply with the ASCM are also examined. Recognizing the peculiarities involved in biofuels and renewable electricity, Chapter IV addresses further different WTO rules governing these RE sources, namely the Agreement on Agriculture (AoA) and the General Agreement on Trade in Services (GATS). These two chapters also briefly analyze the realities of global trade in RE and consider the possibility of trade disputes arising in RE sector in the near future.Finally Chapter V offers suggestions as to the way forward. Given that RE incentive measures are likely to result in trade disputes of different kinds and hence are vulnerable under the WTO system, yet the use of certain trade distortive subsidies for environmental purposes may be justified under a different scenario, the absence of an Article XX of the General Agreement on Tariffs and Trade (GATT1994) provision in the ASCM should be given serious consideration. This chapter argues in favor of the revival of non-actionable and holds that any attempt to introduce particular environmental exceptions into the ASCM should entail a necessity test similar to Article XX (b) of the GATT1994 to ensure that such exemptions will not be hijacked by domestic interest groups to the detriment of both trade and the environment. |
