Disputes concerning dominance of the world’s renewable energy sector heated up in the past week: The U.S.-based United Steelworkers (USW) filed a trade case alleging that “illegal” Chinese policies and practices threatened America’s industries, while Japan complained to the World Trade Organization (WTO) that Ontario’s feed-in-tariff (FIT) program violated rules and is protectionist.
Steelworkers: China’s Renewable Sector Policies Are “Protectionist and Predatory”
The USW—the largest industrial union in North America—on Thursday alleged in a 5,800-page trade case filed with the office of the U.S. Trade Representative that China used “protectionist and predatory” practices to develop its renewable sector at the expense of production and job creation in the U.S.
“The case alleges that China has utilized hundreds of billions of dollars in subsidies, performance requirements, preferential practices and other trade-illegal activities to advance its domination of the sector,” the USW said in a statement. The complaint cited five broad areas in which the union contends that China’s policies go against WTO rules; these range from export restriction on rare-earth elements to technology transfer. It also cites unfair subsidies—asserting that China rigs bidding processes for wind power projects by forcing consideration of “local content”—and financing arrangements for Chinese exporters.
The USW said that the Obama Administration and Congress have spent considerable time and effort on promoting green jobs as a vital component of a long-term growth strategy, but “if China’s illegal actions are left unchecked, the promise of green jobs will not come to fruition.”
“America is losing its leadership of this sector in large part because of China’s plans to control this industry no matter what,” said USW Vice President Tom Conway. “They’re breaking every rule in the book.”
Without mentioning the USW case, Secretary of Energy Stephen Chu said yesterday at the Montana Economic Development Summit that the arguments about doing something to mitigate climate change vs. doing nothing (out of "legitimate concern" about how climate change mitigation efforts might affect the economy) present a "false choice," because “We are in a race to develop clean energy technologies the world will need.” He then itemized a number of areas in which China is in the lead, including installing the highest voltage transmission lines in the world.
Japan: Ontario FIT Violates Trade Rules
Japan filed a trade dispute against Canada, reiterating concerns it shared with the U.S. at an April 27 meeting at the WTO over the domestic-content requirement provisions of Ontario’s FIT program for renewable energy.
Ontario’s FIT program, passed in May 2009 as part of the province’s Green Energy and Green Economy Act, is lauded as one of most effective in the world. So far, the program has already attracted about C$8 billion worth of wind, solar, and hydro projects to Ontario.
It demands, however, that generators taking advantage of above-market long-term pricing for solar and wind power must procure 50% of parts for their facilities from local manufacturers. The ratio will rise to 60% next year, Japanese officials said.
Japan contends that this violates Canada’s obligations under international trade law, arguing in its filing with the WTO that the provision was prejudiced against renewable energy products made in foreign countries.
The Japanese Ministry of Economy, Trade, and Industry alleges that the FIT “made in Ontario” requirement falls under the definition of a “prohibited subsidy (subsidies contingent on the use of domestic over imported goods.)” In a statement released on Monday, it said: “Solar panels or other equipments exported by Japanese companies to Ontario are less favorably treated than those locally produced.”
Canada had in April told the WTO that it would provide a full reply to Japan’s concerns after consultations with the Province of Ontario. On Monday, Brad Duguid, Ontario’s energy minister, said in a statement that he had not yet seen the details of Japan’s claim but that “it is Canada’s view that Ontario’s Green Energy Act is consistent with Canada’s international trade obligations under the WTO.”
Japan will now undergo formal consultations under the WTO with the Canadian government.
Sources: POWERnews, USW, WTO, Japanese Ministry of Economy, Trade, and Industry