The World Trade Organization (WTO) announced a ruling against Ontario’s renewable energy incentives program that is designed to reduce carbon emissions and create clean energy jobs. The WTO ruling sided with the European Union and Japan's complaint against Ontario's Green Energy Act. The dispute centers on Ontario's feed-in tariff (FIT) program, which requires regional and national electric-grid utilities to purchase electricity from renewable sources like solar, wind and hydro-electric power.
At issue is the fact that Ontario government requires the renewable energy projects to source local content - with a minimum amount of goods and services from Ontario. The WTO deemed that the program violates the WTO General Agreement on Tariffs and Trade.
The WTO ruled that Ontario’s renewable energy incentives – or “feed-in tariff” – program violated the WTO rules that forbid treating local or domestic firms and products differently from foreign firms and products.
"As countries take steps to address the climate crisis, the last thing we need is the WTO interfering with innovative climate programs. 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," said Ilana Solomon, Sierra Club Trade Representative.
Ontario’s renewable energy incentives program was established under the Green Energy and Green Economy Act of 2009. It increases incentives to develop clean and safe renewable energy by guaranteeing the provincial public electricity utility, Ontario Power Authority, will pay a competitive price for 20 years to companies for the wind, solar, and other clean energies they produce. Although the program is new, it has already achieved significant success, including contracts for an estimated 4,600 megawatts worth of clean energy and the creation of more than 20,000 jobs.
"Only an attack on this sort of job-creating, climate-chaos-combating policy could put the WTO in worse repute than last year’s string of WTO rulings ordering us to gut popular U.S. laws on country-of-origin meat labels, dolphin-safe tuna labels and limits on candy-flavored cigarettes marketed to kids," said Lori Wallach, Public Citizen Global Trade Watch Director. "Combating the climate crisis and transitioning to a clean-energy economy must include relocalizing production and creating green jobs, so having the WTO declare that governments cannot do this is simply intolerable."
The Sierra Club and Public Citizen said they are particularly disappointed that the U.S. decided to weigh in on this case by submitting a third-party brief pointing out how Ontario’s program violated WTO rules.
Council of Canadians responds to WTO Panel ruling against Ontario's green energy program: “Without local content requirements for solar and wind power, the Green Energy Act is almost worthless to Ontario. Our provinces and local governments should have the right to ask for some local content in big projects like energy, transit and construction. These kinds of policies are used the world over to create vibrant local businesses. The alternative way of attracting investment is to cut wages and taxes, which is just a race to the bottom. We need more options if we are going to make our economies more sustainable. The Green Energy Act was one of those options and we expect the federal government to appeal this unfortunate WTO decision.” - Stuart Trew, trade campaigner, Council of Canadians.