Wednesday, September 7, 2011

EU joins Japan, US and files WTO complaint against Canada over Ontario renewable energy FIT

The European Union (EU) has officially requested World Trade Organization (WTO) consultations on the subsidies the province of Ontario gives to renewable-energy producers that use domestic technology. The EU’s formal request was issued on August 11, 2011 and just accepted by the WTO. The EU’s request follows on the establishment of a WTO dispute panel to hear Japan’s complaints against Canada regarding the feed-in-tariff (FIT) program. Under WTO rules, the EU and Canada must now hold talks for at least two months in a bid to resolve the dispute. If the talks fail, the EU can ask WTO judges to rule. The US is also involved in discussions regarding the same matter. Canada, the EU, Japan and the US are all major players in the green energy industry.

Under the Ontario FIT, which was created by the provincial Green Energy Act, developers are paid above-market rates for provision of renewable energy provided it is generated with a certain percentage of Ontario-made equipment. Under the Ontario FIT up to 50% of the initial costs to develop a solar-energy project must be made of up products or services from. The Ontario FIT pays as much as $0.802 CAD per kilowatt hour for PV energy electricity generated which compares to the industry average of about $0.10 – a difference of almost 8x and one of the most significant feed-in-tariff payments in the world for PV electricity. From the perspective of Ontario and Canada the Ontario FIT has been a resounding success and is in the process of being emulated in many jurisdictions across North America. The Green Energy Act aims to help Ontario meet its goal of shutting all its coal-power generators by 2014. Germany, the UK, the US and soon Japan have their own feed-in-tariff programs but the dispute focuses on the specific “Buy Ontario” provisions.

EU exports to Canada in wind power and photovoltaic (PV) power- generation equipment are “significant,” according to the European Commission, ranging from 300 million EUR ($416 million CAD) to 600 million EUR ($833 million CAD) between 2007 and 2009.

Bloomberg is reporting that Caitlin Workman, a spokeswoman for Canada’s Trade Department in Ottawa, has stated that Canada will “vigorously defend Canada’s interests during these proceedings” at the WTO.

This announcement comes at a difficult time, as the province of Ontario kicks off a provincial election campaign which pits current Liberal party premier Dalton McGuinty (who spearheaded the Ontario FIT and is a significant supporter of renewable energy) against Conservative incumbent Tim Hudak. In a move reminiscent of post-colonial African dictators of the 1950s, Hudak vowed to rip up a $7 billion CAD MOU for wind and solar power which the Ontario government signed with multinational Samsung. If elected Hudak also vowed to scrap the Ontario FIT.

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