U.S., India battle at the WTO over incentives for local solar development

The World Trade Organization said Sept. 9 that India has requested consultations with the United States under the dispute settlement system regarding alleged domestic content requirements and subsidies provided by eight states (Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota) in the renewable energy sector.

The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.

The Sierra Club said Sept. 12 that this dispute erupted just days before the World Trade Organization is expected to release its final ruling in a case the U.S. launched against an India solar energy initiative. Many U.S. states have renewable energy programs that, like India’s solar program, include “buy-local” rules that create local, green jobs and bring new solar entrepreneurs to the economy, the club added.

The Sierra Club and other environmental organizations have long called on the United States to drop its case against India’s solar program, citing the case as a threat to local renewable energy development, clean energy jobs, and the fight against climate disruption.

Ilana Solomon, director of the Sierra Club’s Responsible Trade Program, said: “The attacks on local solar energy programs at the WTO are completely at odds with the global imperative to tackle climate change. India has retaliated, threatening solar programs across eight U.S. states, after the United States refused to drop its case over India’s ambitious solar program that has brought more than 8,000 megawatts of solar energy to India. It’s high time for both the United States and India to drop their cases, and for WTO countries to all agree to stop fighting solar programs that protect clean air, clean water, and the climate. With the Paris Climate Agreement on the brink of taking effect, corporate trade rules can’t stand in the way of climate action.”

The club noted that India’s National Solar Mission aims to reduce the cost of solar power “through rapid scale-up of capacity.” The program is a core component of the country’s contribution to the Paris agreement to tackle climate disruption. India has already installed more than 8,000 MW of solar capacity under the program and aims to achieve 100,000 MW by 2022, which would make India one of the world’s largest solar energy producers.

The United States officially launched its WTO case against the buy-local provisions of India’s solar program in 2014. In February 2016, the WTO ruled against the provisions, arguing that they “accord less favorable treatment” to imported solar components, even while acknowledging that “imported cells and modules currently have a dominant share of the market for solar cells and modules in India.” India appealed the ruling in April 2016. The WTO is expected to rule on India’s appeal imminently.

The club said that examples of simular programs in some of the named states include:

  • California has a successful rebate program that includes incentives for wind energy technologies manufactured in California.
  • Washington has a similar program to encourage small-scale renewable energy production, with incentives for solar and wind components made in Washington.
  • Minnesota also provides financial incentives to homeowners and businesses that install solar modules that are made in-state.
  • Connecticut’s Green Bank, which provides financial assistance for renewable energy projects, is required by state law to prioritize projects with components manufactured in Connecticut.
  • Michigan has an incentive program in which renewable energy generated from equipment madein-state receives an additional 10% of renewable energy credits for the first three years of operations.
  • Delaware has a similar incentive program in which renewable energy providers receive an additional 10% of renewable energy credits where at least half of the cost of solar or wind installations is from equipment manufactured in-state.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.