Legal Constraints on Renewable Energy Subsidies under the SCM Agreement and the New Policy Space
Date Issued
2015
Date
2015
Author(s)
Huang, Hai-ning
Abstract
Renewable Energy subsidy is one of the most widely used policy instruments to promote and develop the renewable energy industry. The rationale behind the renewable energy subsidy can be found from the two perspectives. One is the policy objectives of promoting renewable energy, which the foundation could be established, based on several international law system or principles, such as climate change mitigation, sustainable development, and green economy. The other is the rationale of using subsidy as the policy instrument to develop infant industry and helps such industry to reach the scale. From both perspectives, the legitimacy of the renewable energy subsidy can be established. After the case of Canada – Renewable Energy regarding whether the feed-in tariff attaching local content requirement is consistent with the relevant WTO rules has been raised by the European Union and Japan to the WTO dispute settlement system, the legitimacy of renewable subsidy as well as its policy space under WTO law have become the spotlight in both academic and practicing field. The Appellate Body Report of Canada – Renewable Energy has even busted out controversies on how to interpret and understand the definition of subsidy which is set forth in the SCM Agreement. In other words, even the renewable energy subsidy is recognized as have strong legitimate basis, the policy space of using subsidy to promote and develop renewable energy industry may be constrained under WTO regal regime since it might be easily challenged as prohibited or actionable subsidy. In addition, the controversies resulting from the Canada – Renewable Energy Appellate Body Report also shows that simply building up the “safe harbor” of renewable energy subsidy under WTO law through the treaty interpretation may not help. Rather, the law reform may be the appropriate approach to safeguard the policy space of renewable energy subsidy under WTO legal regime. Based on the foregoing, the thesis firstly tries to identify the importance of the renewable energy, and the barriers of promoting and developing the renewable energy industry. Secondly, the thesis tries to identify the rationale of using subsidy as a policy instrument to overcome the barriers and further identifies the typology of the current renewable subsidies which are imposed by the WTO members. Thirdly, the thesis argues that under SCM Agreement, most types of the renewable energy subsidies fall within the meaning of the definition of subsidy and may be challenged under SCM Agreement, namely, the policy space of renewable subsidy is constrained. In addition, taking the analysis under Canada – Renewable Energy Appellate Body Report, the thesis further argues that simply building up the “safe harbor” of renewable energy subsidy under WTO law by treaty interpretation may not help. Lastly, the thesis argues that the law reform may be the appropriate approach to safeguard the policy space of the renewable energy subsidy. The thesis then provide a draft “Understanding in Respect of the Renewable Energy Subsidy” in the WTO framework as the conclusion. As a noting chapter, after providing the draft Understanding, the thesis tries develop the possibility of establishing the legitimacy of using local content requirement attaching in the renewable energy subsidy.
Subjects
Renewable energy
Renewable energy subsidy
WTO
SCM Agreement
Climate change mitigation
Sustainable development
Green economy
policy space
industrial policy
dispute settlement
Type
thesis
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