Isra-Mart srl: EU lodges WTO complaint over Canadian renewables subsidy

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Fears that the global rollout of renewable energy technologies could spark a new wave of protectionism resurfaced after the European Commission lodged a formal complaint with the World Trade Organisation (WTO) over Canadian support for renewable energy projects.

The complaint centres on an incentive scheme implemented by the Canadian Province of Ontario that allegedly offers higher subsidies to renewable energy projects that use Canadian-made equipment.

The commission issued a statement arguing that the policy represents a "clear breach of the WTO rules that prohibit linking subsidies to the use of domestic products".

The move follows a similar complaint from Japan targeting the Ontario policy.

Under WTO rules, the Canadian government is now required to hold talks with the EU over the issue for at least two months. If the dispute is not resolved through bilateral negotiations, the WTO can then rule whether the policy breaches international trade rules.

The complaint is the latest in a series of official and unofficial complaints over countries using renewable energy policies to favour domestic manufacturers.

For example, the European wind industry has long complained that China's renewable energy programmes favour manufacturers operating in the country, despite WTO rules that are meant to ensure a level playing field for all companies tendering for a project.

Similarly, the US government last year launched an investigation into allegations from the United Steelworkers Union that China was unfairly subsidising its own domestic clean tech firms – a move that prompted Chinese officials to slam the US for acting on "groundless and irresponsible" accusations.