Energy Subsidies under the WTO

Hopes of a Level Playing Field for Fossil Fuels and Renewable Energy

‪By Francis T. Dwyer

Francis Dwyer is a 2014 graduate of Albany Law School where he was an associate editor on Albany Law Review and a member of the Environmental Law Society. He received his undergraduate degree from the University at Albany where he studied Sociology and Criminal Justice.

He is currently an Excelsior Service Fellow at New York State Department of Public Service, in the Office of General Counsel.

This paper was prepared for Professor Halewood’s International Trade Law seminar.

Government subsidies in the energy sector affect both international trade and the environment. Currently, there is a trend that promotes subsidizing fossil fuels and stifles subsidies on renewable energy sources. From an environmentalist’s point of view, this is the opposite of what subsidy regulation should be. The World Trade Organization (WTO) should regulate subsidies in a way that discourages the consumption of fossil fuel and encourages the development of renewable energy sources.

This paper first lays out subsidy regulation under the WTO generally and takes a look at how disputes are settled. It then discusses the issues surrounding subsidies on fossil fuels and renewable energy sources, respectively. Finally, it addresses what can be done to solve these problems regarding energy subsidies in order to promote WTO rules that address environmental concerns.

This paper argues that through the use of a multilateral agreement, the WTO can and should administer rules that have ultimate authority to regulate energy as it relates to international trade. Such an “Agreement on Energy” could address energy and international trade in a similar fashion as the Agreement on Agriculture addresses trade issues surrounding agriculture.

The WTO has noted the importance of environmental issues, now it needs to do something. An agreement on energy subsidies is a great place to start. Clear rules could still protect the policy interests surrounding fossil fuel subsidies while promoting renewable energy subsidies. The goal is to create an equal playing field to subsidize both energy sources.

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To read the paper, open HERE.

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