The Perfect FIT : Lessons for Renewable Energy Subsidies in the World Trade Organization

Despite the myriad tensions existing at the nexus of the international trade and climate change regimes, perhaps more striking are the similarities that exist between the two. Both are recognised as mechanisms designed for pursuing a global good - whether that be increasing wealth or combatting anthropogenic climate change - seemingly providing fertile ground for the conclusion of international agreements, yet both are plagued by political inertia on the international level, destined to do no more than produce rhetoric lauding their final goal. Set against the underwhelming outcome of the Rio 20 conference and the continuation of the Doha Round of negotiations, this article examines one particular example of such inertia encountered at this crucial crossroads - specifically, the framework regulating subsidies for renewable energy in the World Trade Organization (WTO). Whilst the inadequacy of the WTO rules regulating renewable energy subsidies has been evaluated extensively elsewhere, this article instead focuses on a legal analysis that aims to inform the design of subsidies that would not fall foul of the WTO rules as they currently stand. This approach enables implementing states to take all necessary steps to ensure that their subsidies are not vulnerable to legal challenge within the WTO. Taking feed-in tariffs (FITs) as an illustrative example of renewable energy subsidies, the article analyses the pertinent rules of the WTO Agreements, and relevant Dispute Settlement Understanding (DSU) jurisprudence, in order to draw four general principles that should be followed in the design and formulation of renewable energy subsidies; namely, the effective positioning of the subsidy within a larger climate change policy, strict adherence to the principle of non-discrimination, the maintenance of policy links to international standards and agreements, and the institution of transparent and open design, implementation and enforcement processes. Placed against the impasse of the current Doha Round negotiations, the creation of renewable energy subsidies that are impervious to WTO regulation offers a realistic and achievable method of promoting climate change mitigation in international trade