Clean Energy Technologies and the Trade System
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TheE15Initiative Strengthening the Global Trade System Clean Energy Technologies and the Trade System Proposals and Analysis December 2013 E15 Expert Group on Clean Energy Technologies and the Trade System Compilation Report Co-convened with ACKNOWLEDGMENTS Published by International Centre for Trade and Sustainable Development (ICTSD) 7 Chemin de Balexert, 1219 Geneva, Switzerland Tel: +41 22 917 8492 – E-mail: [email protected] – Website: www.ictsd.org Publisher and Chief Executive: Ricardo Melé ndez-Ortiz World Economic Forum 91-93 route de la Capite, 1223 Cologny/Geneva, Switzerland Tel: +41 22 869 1212 – E-mail: [email protected] – Website: www.weforum.org Co-Publisher and Managing Director: Richard Samans Acknowledgments This paper has been produced under the E15Initiative (E15). Implemented jointly by the International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum, the E15 convenes world-class experts and institutions to generate strategic analysis and recommendations for government, business and civil society geared towards strengthening the global trade system. For more information on the E15, please visit www.e15initiative.org The Expert Group on Clean Energy Technologies and the Trade System is co-convened with Friedrich-Ebert-Stiftung – www.fes.de/ – and Chatham House – www.chathamhouse.org/ With the support of: And ICTSD’s Core and Thematic Donors: Citation: Clean Energy Technologies and the Trade System: Proposals and Analysis. E15Initiative. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum, 2013. www.e15initiative.org/ The views expressed in this publication are those of the authors and do not necessarily reflect the views of ICTSD, World Economic Forum, or the funding institutions. Copyright ©ICTSD and World Economic Forum, 2013. Readers are encouraged to quote this material for educational and non-profit purposes, provided the source is acknowledged. This work is licensed under the Creative Commons Attribution-Non-commercial-No- Derivative Works 3.0 License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. ISSN 2313-3805 CONTENTS Introduction. By Ricardo Meléndez-Ortiz 1 1. Winds of Change and Rays of Hope: How can the Multilateral Trading System Facilitate Trade in Clean Energy Technologies and Services? By Mahesh Sugathan 3 2. Does It Fit? An Assessment of the Effectiveness of Renewable Energy Measures and of the Implications of the Canada – Renewable Energy/Fit Disputes By Aaron Cosbey and Luca Rubini 39 3. Securing Policy Space for Clean Energy Under the SCM Agreement: Alternative Approaches By Robert Howse 47 4. Climate Change and a Renewable Energy Scale-Up: Responding to Challenges Posed to the WTO By Amelia Porges and Thomas Brewer 52 5. Trade Remedies on Clean Energy: A New Trend in Need of Multilateral Initiatives By Jonas Kasteng 60 6. Trade Remedies and Development of Renewable Energy By Gary Horlick 69 7. Pushing the Renewable Energy Agenda Forward: Some Select Lessons from the GATS By Johannes Bernabe 74 About the Authors 79 List of Expert Group Members 81 access to sustainable energy; increased energy security; and economic imperatives such as establishing a domestic manufacturing base in clean energy goods and services, and INTRODUCTION creating “green” jobs. Some of these domestic policies are in conflict with THE E15INITIATIVE existing trade rules. Indeed, the WTO is currently facing an increasing number of disputes and cases on trade remedies related to clean energy and to countries’ ambitions to build A plethora of critical, impending issues mire the multilateral and strengthen their renewable energy sectors. At the same trading system of today. Ensuring food security in times time, it should be clear that the multilateral trading system of high and volatile prices, addressing concerns around currently does not address energy in a holistic manner, natural resource scarcity, or scaling up sustainable energy and therefore fails to deliver certainty and predictability production and diffusion are just a few of many. The to governments and to private actors. Existing rules were fragmentation of production through highly complex global agreed upon long before climate change was on the minds value chains also poses critical challenges at the analytical of policymakers. and policy level. It is in this context that the E15 Expert Group on In the meantime, preferential trade agreements continue Clean Energy Technologies and the Trade System was to proliferate and have now become the de facto locus to established to explore options to strengthen the deepen integration and further liberalization. In the face of multilateral trading system in the area of clean energy. the Doha deadlock, some have questioned the way in which negotiations are conducted, arguing that the World Trade The overview paper in this compilation, “Winds of Change Organization’s (WTO) established practices of decision- and Rays of Hope: How Can the Multilateral Trading making, such as the notion of a single undertaking, are ill System Facilitate Trade in Clean Energy Technologies suited to the fast-changing challenges of our times. and Services?” by Mahesh Sugathan set the context for discussions at the first E15 meeting by highlighting In the light of these pressing challenges, the E15Initiative a number of issues important to considering how the is a process aimed at exploring possible futures for multilateral trading system can play a more supportive role the multilateral trade system. Launched in 2012 by in facilitating greater deployment of clean energy goods the International Centre for Trade and Sustainable and services. From this perspective, the paper examines Development (ICTSD), the initiative engages top global five key issues at the interface of trade and clean energy experts and institutions in thinking ahead on critical issues policy—(i) tariffs; (ii) clean energy incentives, subsidies facing the multilateral trading system, bringing fresh ideas and local content measures; (iii) services; (iv) government to the policy environment, and solutions and opportunities procurement policies; and (v) standards and certification. for governance reform. It also examines WTO process-related issues and systemic questions and raises the issue of whether interim measures may be necessary to reduce the likelihood of trade disputes THE E15INITIATIVE ON CLEAN ENERGY related to clean energy policies until meaningful progress TECHNOLOGIES AND THE TRADE SYSTEM may be made on the other WTO pillars such as market access, transparency, and rules. The first meeting of the E15 experts identified a number of The Expert Group that was created on Clean Energy areas for further research and thinking in trade and clean Technologies and the Trade System within the E15 process energy, including in the realm of clean energy incentives; is jointly convened by the ICTSD with the Chatham House trade remedies; dispute settlement; and rules and services. and the Friedrich Ebert Stiftung to examine the relation Major questions and issues related to these areas were between the trade system and clean energy. This relates subsequently addressed through think pieces that were both to the fact that there is an increasingly tangible presented at the second meeting of the E15 experts. tension between clean energy policies and existing trade rules, and to the opportunities the WTO has to smoothen “Does it FIT? An Assessment of the Effectiveness of the transition to clean energy by addressing numerous Renewable Energy Measures and of the Implications of trade-related barriers to clean energy goods and services. the Canada–Renewable Energy/FIT Disputes” by Aaron Cosbey and Luca Rubini considers whether the recent Governments increasingly implement policies to promote Canada-Renewable Energy/Feed in Tariffs (FIT) case gives a transition to clean energy. These measures are taken to any ammunition to the argument that the WTO’s subsidy facilitate a number of objectives underpinning sustainable law, as embodied in the Agreement on Subsidies and energy transition, including climate change mitigation Countervailing Measures(SCM), is in need of reform. Among through a reduction of greenhouse gases; expanding others, it also considers the measures examined in the 1 dispute, their effectiveness in achieving their goals, and the and suggestions that will feed into various processes to take extent to which they distort trade. the WTO forward. This is followed by a piece on “Securing Policy Space for Further information about the Expert Group on Clean Clean Energy under the SCM: Alternative Approaches” Energy Technologies and the Trade System, the experts, by Robert Howse, which proposes concrete options for and the latest developments in the E15Initiative can be addressing the need for policy space under the WTO found at www.e15initiative.org. SCM Agreement with respect to clean energy. This could help not only resolve uncertainty and potential market instability created by spiraling trade disputes, but also provide a secure policy space for clean energy initiatives justified by climate and other environmental objectives. “Climate Change and a Renewable Energy Scale-up: Ricardo Meléndez-Ortiz Responding to Challenges” by Amelia Porges and Thomas Chief Executive, ICTSD Brewer discusses the costs and benefits of options for adjusting WTO rules to provide