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2018 | OriginalPaper | Buchkapitel

The Trade and Environment Debate on the Regulation of Energy Subsidies in the WTO: What Kept Fossil Fuel Subsidies Off the Radar Screen?

verfasst von : Henok Birhanu Asmelash

Erschienen in: Energy Law and Economics

Verlag: Springer International Publishing

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Abstract

The multilateral rules on subsidies have come under intense scrutiny in the wake of rising trade disputes over renewable energy subsidies. The sudden surge in the number of trade disputes and countervailing duty actions against renewable energy support programs has raised concerns that the multilateral subsidy rules may stand in the way of global efforts to promote the development and deployment of renewable energy sources. This paper shares these concerns, but argues that they are only one side of the environmental concerns that arise from the regulation of energy subsidies in the multilateral trading system. Energy subsidies play a dual role from a sustainable energy transition perspective. While renewable energy subsidies tend to help accelerate the transition, fossil fuel subsidies do exactly the opposite. If the multilateral subsidy rules are to help accelerate but not hinder the transition, then they should not only allow governments to subsidise renewables but also discourage them from subsidising fossil fuels. However, the regulation (or lack of) of fossil fuel subsidies in the multilateral trading system receives relatively little attention in the scholarly, policy and judicial debate on trade and environment. This paper attempts to answer why the fossil fuel subsidy issue receives scant scholarly attention.

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Fußnoten
1
Agreement on Subsidies and Countervailing Measures, General Agreement on Tariffs and Trade 1994, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (SCM Agreement).
 
2
The WTO disputes over renewable energy subsidies are: Canada-Renewable Energy; Canada-FIT; China Wind Power Equipment; US- Countervailing Measures (China); India-Solar Cells; EU – Biodiesel; EU-Renewable Energy Generation Sector; and US-Renewable Energy. For the list of countervailing measures against renewable energy subsidies from 2008 to 2012, see UNCTAD (2014).
 
3
WTO (2013).
 
4
See, e.g., Cosbey and Mavroidis (2014), p. 11; Rubini (2012), p. 525; Shadikhodjaev (2015), p. 479; Simmons (2014), p. 422.
 
5
The latest estimate from the International Energy Agency (IEA) puts fossil fuel conception subsidies at USD 347 and renewable energy subsidies at USD 167. See IEA (2016).
 
6
See G-20 Leaders’ Statement: The Pittsburgh Summit, September 24–25, 2009 (Pittsburgh Agreement).
 
7
See Asmelash (2016).
 
8
See IEA (2012), p. 25; McGlade and Ekins (2015), p. 187.
 
9
See Asmelash (2015), p. 261.
 
10
See Kulovesi (2011), p. 85 (noting that ‘the origins of the contemporary debate on trade and the environment can be traced to the two GATT reports in the Tuna-Dolphin dispute’).
 
11
GATT (1991, 1994).
 
12
On the US-Tuna Panel rulings, see Thaggert (1994); Kingsbury (1994), p. 1.
 
13
See Kulovesi (2011), p. 87; Joseph (1994).
 
14
See Esty (1994), p. 35.
 
15
See, e.g., General Agreement on Tariffs and Trade 1994, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (GATT 1994), Article XX; Agreement on Trade-related Aspects of Intellectual Property Rights, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C (TRIPS), Article 17; Agreement on Technical Barriers to Trade, General Agreement on Tariffs and Trade 1994, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A (TBT Agreement), Article 2.2; SCM Agreement (n 1), Article 8.
 
16
See Marrakesh Agreement Establishing the World Trade Organization, opened for signature 15 April 1994 (entered into force 1 January 1995), para.1 of the preamble.
 
17
The Marrakesh Ministerial Decision on Trade and Environment, MTN/TNC/45(MIN), adopted 15 April 1994.
 
18
See Charnovitz (2007a), p. 19 (‘one can hardly doubt that environment is now part of the WTO’s mandate’).
 
19
See Pauwelyn (2004); Charnovitz (2007b), p. 685.
 
20
WTO (1996).
 
21
WTO (1996), pp. 22 & 29.
 
22
WTO (1998).
 
23
WTO (2001), Article 215.
 
24
See Kulovesi (2011), p. 101.
 
25
Kulovesi (2014), p. 55.
 
26
US-Gasoline (n 21), at 17; US-Shrimp (n 23).
 
27
See Kyoto Protocol to the United Nations Framework Convention on Climate Change (adopted 11 December 1997, entered into force 16 February 2005) 2303 UNTS 148 (Kyoto Protocol).
 
28
See Pauwelyn (2013); Kulovesi (2014), pp. 72 et seq.
 
29
There was some talk about introducing BCAs in the EU after the establishment of the EU Emission Trading Scheme (ETS), but it has never gained serious political backing. See Pauwelyn (2013); Kulovesi (2014), p. 75.
 
30
As Kulovesi pointed out, the trade and environment conflict represented by the WTO-consistency of trade-related environmental measures such as BCAs is more imagined than real. See Kulovesi (2014).
 
31
See Stiglitz (2006).
 
32
Bhagwati and Mavroidis (2007), p. 299.
 
33
See Jegou and Rubini (2011).
 
34
WTO (2017).
 
35
Only a handful of scholars commented on the environmental implications of the SCM Agreement before 2010. The most notable among these are: Howse and Eliason (2009); Howse (2006), p. 500; Green (2006), p. 377; Bigdeli (2009); Bigdeli (2008), p. 78; Ayala and Gallagher (2009), p. 131.
 
36
SCM Agreement, Article 1.1.
 
37
SCM Agreement, Article 1.2 and 2.
 
38
SCM Agreement, Article 3.
 
39
SCM Agreement, Article 5.
 
40
SCM Agreement, Article 8.
 
41
SCM Agreement, Article 31.
 
42
Canada-Renewable Energy/FIT (n 3).
 
43
Bigdeli (2016), p. 121.
 
44
See Canada-Renewable Energy/FIT (n 3), para 5.128 & 5.246.
 
45
Weber and Koch (2015), p. 779.
 
46
For a polemical criticism, see Rubini (2014), p. 895; Cosbey and Mavroidis (2014); Rubini 2015, p. 211.
 
47
See Request for Consultations by the United States, India – Certain Measures Relating to Solar Cells and Solar Modules (India – Solar Cells), WT/DS456/1, G/L/1023 G/TRIMS/D/35, G/SCM/D96/1, 11 February 2013; Request for Consultations by the United States, India – Certain Measures Relating to Solar Cells and Solar Modules (India – Solar Cells), WT/DS456/1/Add1, G/L/1023/Add1, G/TRIMS/D/35/Add1, G/SCM/D96/1/Add1, 13 February 2014; Request for Consultation by India, United States – Certain Measures Relating to the Energy Sector (US-Renewable Energy), WT/DS510/1, G/L/1149, 19 September 2016.
 
48
See Cosbey and Mavroidis (2014), p. 12.
 
49
See, e.g., Bacchus (2012).
 
50
Shadikhodjaev (2015), p. 499.
 
51
For further discussion on the arguments for and against the application of GATT Article XX to the SCM Agreement, see Rubini (2012).
 
52
See Howse (2008); see also Havel and Sanchez (2014), p. 382.
 
53
On the applicability of GATT Article XX outside the GATT, see Shadikhodjaev (2015), pp. 499–505; Feld and Switzer (2012), p. 16.
 
54
This view broadly echoes the concern (of economists) that exceptions or ‘safe harbours’ aimed at promoting public goods can be abused and end up sheltering subsidies that are counterproductive to providing public goods. See Sykes (2003), pp. 22–23.
 
55
See Leal-Arcas and Filis (2015), p. 50 (‘the policy space appears to be preserved for WTO members to take measures to support environmental goals, including the promotion of renewables’); Grigorova (2015), p. 17.
 
56
See, e.g., Rubini (2017); Giupponi (2015), p. 21.
 
57
See Charnovitz (2014), p. 73.
 
58
Rubini (2017).
 
59
Paul Krugman is often quoted for suggesting that the proper policy response to a foreign state’s subsidies is ‘to send a thank you note to the embassy’. See Sykes (2007), p. 107. For the economic case for and against the multilateral regulation of subsidies, see Sykes (2010), p. 473.
 
60
See, e.g., Howse (2013); Rubini (2017); Cosbey and Mavroidis (2014); Cottier (2014), p. 40; Bigdeli (2011), p. 2; Shadikhodjaev (2015); Wu and Salzman (2014), p. 401; Farah and Cima (2014), p. 515.
 
61
See Casier and Moerenhout (2013). This should not be seen as a criticism of the dispute settlement mechanism, which is rightly described as the ‘crown jewel’ of the multilateral trading system. For a recent account of the role played by the dispute settlement mechanism in strengthening the multilateral trading system, see Howse (2016), p. 9.
 
62
See, e.g., Greenwald (2003), p. 113; Cartland et al. (2012), p. 979.
 
63
This was evident in the recent reappointment controversy. See Shaffer (2016).
 
64
The Appellate Body’s interpretation will not save renewable energy subsidies such as capital grants, government loans at preferential rates and loan guarantees for technologies that produce electricity from renewable energy sources (e.g. solar energy and wind power) from legal challenges under the SCM Agreement.
 
65
See Lewis (2014), p. 10; Sugathan (2013), p. 23.
 
66
See IEA (2015) and Coady et al. (2015).
 
67
See Burniaux and Chateau (2014), Clements et al. (2013), Coady et al. (2017), Larsen and Shah (1992) and Schwanitz et al. (2014).
 
68
Larsen and Shah (1992).
 
69
See Depledge (2000), pp. 23–24.
 
70
See Kyoto Protocol (n 28).
 
71
See Asmelash (2016).
 
72
See Pittsbrugh Agreement (n 6); G7 Ise-Shima Leaders’ Declaration: G7 Ise-Shima Summit, 26–27 May 2016 (Ise-Shima Agreement).
 
73
I have discussed this elsewhere, see Asmelash (2017).
 
74
Lamy (2013a).
 
75
GATT Ministerial Declaration adopted on 29 November 1982, L/5424, p. 14.
 
76
See Milthorp and David (2012).
 
77
Doha Ministerial Declaration (20 November 2001) WT/MIN(01)/DEC/1, paras 28 & 31. For a detailed account of the negotiations, see Chen (2010).
 
78
See Asmelash (2015), pp. 279–282 (and the citation therein).
 
79
See Asmelash (2015), pp. 282–284.
 
80
For a general discussion on the degree of freedom that legal academics enjoy in comparison to judges and lawyers, see Schlag (2014), p. 235; Bianchi (2016), p. 6 et seq.
 
81
In discussing the role of legal academics in responding to judicial activism by the European Court of Justice (ECJ), Anthony Arnul aptly pointed out: ‘It is true that academics may be constrained in the work they can do by outside factors, […] but those considerations are not generally seen as imposing on them any sort of ethical obligation to engage in a particular type of work’. See Arnull (2013), p. 215.
 
82
Selivanova (2007).
 
83
Selivanova (2010), p. 53.
 
84
See, e.g., Marceau (2010), p. 83; Selivanova (2010), p. 53; Lamy (2013b).
 
85
Selivanova (2014), p. 275; Desta (2003), p. 523.
 
86
The inherent market access bias of the system and the fact that these countries export one product for which market access is not an issue said to have contributed to their reluctance to join the multilateral trading system. See Desta (2003), p. 531 et seq; UNCTAD (2000).
 
87
See Lamy (2013b), p. 111; Cottier et al. (2009), p. 1.
 
88
See UNCTAD (2000), p. 15.
 
89
See Grigorova (2015), (persuasively dispelling the myth of the gentlemen’s agreement based on general international law); Marhold (2013), p. 1 (noting that ‘the existence, scope and content of the alleged gentlemen’s agreement excluding energy is highly debatable. No written form of proof whatsoever of a gentlemen’s agreement excluding energy trade from the GATT/WTO forum exists in GATT negotiating history.’), at fn. 2.
 
90
Grigorova (2015); Meyer (2016), pp. 144–149 (documenting the instances in which energy issues were raised).
 
91
See Selivanova (2010), p. 53 (arguing that it is now commonly accepted that WTO agreements apply equally to energy as to any other product).
 
92
See Schrank (2001), p. 11 et seq; Larsen and Shah (1992) (and the citation therein).
 
93
Bianchi (2016), p. 6.
 
94
Dunoff (2012), p. 137.
 
95
See Wu and Salzman (2014), p. 411 (concluding that ‘The decisions in these so-called Classic cases were hugely influential, seizing the attention of both the environmental and academic communities, and quite literally creating the field of trade and environment law.’). Perhaps the only major exception in this regard is the discussion over border carbon adjustments.
 
96
WEF Ad Hoc Working Group on Trade & Climate Change (2010), p. 13.
 
97
See, e.g., US-Tuna I (n 12); US-Tuna II (n 12); US-Gasoline (n 21); US-Shrimp (n 23).
 
98
See Lamy (2013b), p. 55 et seq.
 
99
This is mainly because of their inclusion in the Doha Round of multilateral trade negotiations.
 
100
See, in general, Esty (1994).
 
101
Esty (1993), p. 32 (noting that ‘Much of the discussion to date has focused on possible legal refinements to the GATT to build environmental sensitivity into the international trading system.’).
 
102
See Williams and Millington (2004), p. 99.
 
103
Report of the World Commission on Environment and Development: Our Common Future. Transmitted to the General Assembly as an Annex to document A/42/427—Development and International Co-operation: Environment (4 August 1987) 42nd Session (Brundtland Report).
 
104
On the definition of sustainable development, see Sum and Hills (1998), p. 129; Williams and Millington (2004).
 
105
Pavoni (2010), p. 649.
 
106
Lydgate (2012), p. 621.
 
107
Lydgate (2012).
 
108
See Bigdeli (2008).
 
109
Singh (2010).
 
110
Lamy (2013a).
 
111
The FFSR has already raised the issue of fossil fuel subsidies in the WTO Committee on Trade and Environment (CTE). See WTO (2015, 2016).
 
112
See Bigdeli (2008).
 
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Metadaten
Titel
The Trade and Environment Debate on the Regulation of Energy Subsidies in the WTO: What Kept Fossil Fuel Subsidies Off the Radar Screen?
verfasst von
Henok Birhanu Asmelash
Copyright-Jahr
2018
DOI
https://doi.org/10.1007/978-3-319-74636-4_14