Ilaria Espa

No iceberg in sight: on the absence of WTO disputes challenging fossil fuel subsidies

The empirical record of dispute settlement cases under World Trade Organization (WTO) rules on energy subsidies consists only of cases against renewable energy (RE) subsidies, whereas WTO members have not challenged others’ much larger and environmentally harmful fossil fuel subsidies. Yet, the WTO agreement on subsidies and countervailing measures would at first sight seem to create possibilities to forestall environmentally harmful subsidization. In this article, we assess possible explanations for the skewed distribution of energy subsidies dispute settlement complaints at the WTO. We argue that differences in legally relevant characteristics of fossil fuel subsidies, on the one hand, and RE subsidies, on the other hand, largely explain this observation. In the case of RE subsidies, in particular, the disputes filed to date have targeted a much narrower set of measures than the whole range of RE subsidies currently in place, namely those incorporating a local content requirement component. Although this finding is not new, we have probed into this question more systematically, both by widening the scope of the empirical analysis from actual to potential WTO disputes on energy-related policies the European Union and the USA might have initiated, and by systematically assessing the plausibility of alternative explanations.

International Trade in Sustainable Electricity: Regulatory Challenges in International Economic Law

Cross-border trade in electricity is rapidly expanding as a result of technical innovations, economic and geopolitical developments, and the ongoing decarbonisation of the electricity sector in response to climate change. The expansion of electricity networks and the integration of increasing shares of renewable energy (RE) electricity into the grid have made long-distance electricity flows both feasible and desirable. Drawing on the work of experts in trade and energy law and policy, and offering novel, multidisciplinary perspectives on the rapidly evolving landscape shaping international trade in electricity, this book examines the most important challenges - technical, economic, legal and policy-related - posed by long-distance and sustainable electricity trade. The book explores the regulatory implications of the policy instruments aimed at supporting RE electricity and considers how best to promote greater overall coherence in international electricity governance.

Negotiating 21st Century Rules on Energy: What Is at Stake for the European Union, the United States and the BRICS?

In the context of the Transatlantic Trade and Investment Partnership (TTIP), the European Union (EU) has taken the lead in promoting the inclusion of a specific chapter on energy trade and investment in order to enhance energy security and promote renewable energy. Irrespective of the success of the TTIP negotiations, the EU proposal can contribute to developing multilateral rules on energy trade and investment. This is especially important given the increased number of energy disputes filed by the EU and the United States against other leading energy market players, including the BRICS. This article provides a normative analysis of the new rules proposed by the EU and reflects on potential responses of BRICS energy regulators. It argues that, while these rules are unlikely to immediately affect BRICS energy practices, they may eventually be ‘imported’ in BRICS domestic jurisdictions in order to promote renewable energy and attract investment in energy infrastructure.

The Treatment of Restrictions and Financial Charges on Imports and Exports of Electricity under EU and International Law

Cross-border trade in electricity is rapidly expanding as a result of technical innovations, economic and geopolitical developments, and the ongoing decarbonisation of the electricity sector in response to climate change. The expansion of electricity networks and the integration of increasing shares of renewable energy (RE) electricity into the grid have made long-distance electricity flows both feasible and desirable. Drawing on the work of experts in trade and energy law and policy, and offering novel, multidisciplinary perspectives on the rapidly evolving landscape shaping international trade in electricity, this book examines the most important challenges - technical, economic, legal and policy-related - posed by long-distance and sustainable electricity trade. The book explores the regulatory implications of the policy instruments aimed at supporting RE electricity and considers how best to promote greater overall coherence in international electricity governance.

Promoting Green Electricity through Differentiated Electricity Tax Schemes

Cross-border trade in electricity is rapidly expanding as a result of technical innovations, economic and geopolitical developments, and the ongoing decarbonisation of the electricity sector in response to climate change. The expansion of electricity networks and the integration of increasing shares of renewable energy (RE) electricity into the grid have made long-distance electricity flows both feasible and desirable. Drawing on the work of experts in trade and energy law and policy, and offering novel, multidisciplinary perspectives on the rapidly evolving landscape shaping international trade in electricity, this book examines the most important challenges - technical, economic, legal and policy-related - posed by long-distance and sustainable electricity trade. The book explores the regulatory implications of the policy instruments aimed at supporting RE electricity and considers how best to promote greater overall coherence in international electricity governance.

Fair Access to Energy Resources, Market Transfers and Climate Change in the WTO

This paper addresses the issues of dual pricing and export restrictions in the energy sector, stressing the comparability of their economic and climate change impacts. It assesses whether WTO disciplines relevant and applicable to such practices are well-equipped to ensure fair access to energy resources. It finds that relevant GATT disciplines are overall deficient in the case of dual pricing and export taxes, while the landscape of WTO-plus obligations generally consisting of a network of narrowly tailored commitments. It discusses possible avenues to address such practices under the ASCM to the extent that they distort domestic energy prices and subsidize consumption of cheap fossil fuels

Renewable Electricity Tax Exemptions and Trade Remedies under International Law: An Assessment of Policy Space under WTO Law, the Swiss-EU FTA, and EU

A study prepared for the Swiss Federal Office of Energy (SFOE) The problem of increasing imports of subsidised renewable electricity from neighboring countries and Member States of the EU, undermining level playing fields for traditional hydropower in Switzerland, can be addressed by means of preferential taxation of electricity produced by means of renewable energy. Both under WTO law and the rules of the 1972 Free Trade Agreement, distinctions may be drawn on the basis of non-product related production and process methods, provided the same rules apply to domestic and imported electricity produced with similar methods. Differential taxation can be implemented on the basis of certificates of origin (CO) which need to be made available alike to domestic and foreign producers. A privilege exclusively granted to domestic producers cannot be lawfully sustained. Also, quantitative restrictions of imports cannot be properly justified. The study recommends adopting a system comparable to the UK model of renewable electricity exemption scheme, in place since 2001. It has not been challenged under EU law or under WTO law. To the extent that considerations of industrial policy dominate the motivation, rather than the promotion of green electricity, measures could be adopted on the basis of countervailing duties, offsetting foreign subsidies granted. Also, recourse to safeguard measures, albeit limited in time, can be contemplated. As Switzerland has little experience in taking recourse to trade remedies, a proper methodology taking into account WTO law would need to be developed and communicated in advance. Finally, efforts should be made to address the issue in negotiations with the European Union and Member States. Both unilateral measures relating to differential taxation as well as trade remedies may be used as an argument to bring about a settlement with exporting countries of subsidised electricity.