Manufacturing AUTOMATION

Canada loses appeal at WTO over Ontario’s green energy legislation

May 7, 2013
By Maria Babbage

The federal and Ontario governments are reviewing a ruling by the World Trade Organization that made-in-Ontario provisions of the province’s green energy laws contravene international guidelines.

But there are no immediate plans to change the legislation, Ontario Energy Minister Bob Chiarelli said Monday.

The legislation has created tens of thousands of jobs in the province, he said, but wouldn’t say whether the WTO ruling could grind that to a halt.

“Our officials are assessing that at this particular point in time,” he said.

“It’s been extremely successful to date and as long as we’re investing in green energy and renewables, there will be job creation. I guess the big question is to what extent will it impact on job creation.”

Japan first brought the case in 2010 arguing that a part of the province’s green energy program requiring made-in-Ontario parts for wind and solar farms breaches international trade law.

Both the U.S. and the European Union later wrote to the WTO that they want to join consultations over a trade complaint, saying they have a significant stake in the discussions.

The feed-in-tariff system—established in 2009—set lucrative fixed prices for electricity generated by renewable energy projects, such as wind turbines and solar panels.

The legislation required participating electricity generators in Ontario to source up to 60 per cent of their equipment in the province if they want to be eligible for generous subsidies.

Japan and the European Union argued the incentives were illegal because they discriminated against foreign firms, a complaint that was upheld by a WTO adjudication panel in December 2012.

Canada appealed in February, but the WTO dismissed it in a decision released Monday.

“As this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, we will work with the Ontario government in order to respond to the decision,” said Caitlin Workman, a spokeswoman for the Department of Foreign Affairs and International Trade.

Canada will have to present its plan for implementing the ruling once the WTO’s dispute settlement body adopts the report within a month, the European Union said.

“The EU is a significant producer and exporter of wind and photovoltaic power but its exports to Canada could be much higher should the measure promoting use of domestic equipment be removed,” it said in a statement posted on its website.

“By restricting imports, the measure taken by Ontario increases the cost of electricity generation and has a negative impact on the deployment of affordable clean energy solutions.”

Former Ontario premier Dalton McGuinty dismissed Japan and the EU’s complaints last year, saying that the requirements have not prevented companies from other countries from trying to participate in Ontario’s green energy program.

He said Ontario secured $27 billion worth of investment from Korea, China, the U.S., France and Germany in renewable energy projects.

The act, which pays generous premiums for wind and solar-generated electricity, has courted controversy within the province as well.

Some communities are upset over the growing number of giant wind turbines popping up across rural Ontario, an issue that cost the governing Liberals seats in the 2011 election.

—The Canadian Press

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