This article describes some of the issues arising from the relationship between renewable energy subsidies and their impact on international trade, including trade in products instrumental to the pursuit of environmental objectives, which may be directly targeted or indirectly affected by such policies. It first provides an overview of some of the renewable energy subsidies currently applied by a number of World Trade Organization (WTO) Members and then reviews the relevant WTO rules and their application to renewable energy support programmes. The article also highlights some key elements of the relationship between trade and climate change. Finally, the authors suggest a possible solution to achieve both environmental objectives and the pursuit of free and fair trade through the application of a ‘peace clause’ against multilateral trade challenges of these types of subsidies, leaving at the same time intact the possibility for WTO Members to apply domestic trade defence measures to address possible trade distortions resulting from the use of environmental subsidies.
Global Trade and Customs Journal