EU Challenges Ontario's Green Energy Act

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2012

The European Union has requested the creation of a dispute settlement panel by the World Trade Organisation to examine Ontario's concessionary treatment of providers of green energy products and services that meet local content requirements under the Canadian province's Green Energy Act.

The dispute follows an identical case brought six months earlier by Japan in June 2011, on the basis that Canadian producers under the Act are guaranteed market entry at selling prices above prevailing market rates, treatment which the EU contends contravenes international trade rules.

To qualify for the concessionary treatment, solar projects must have at least 40% of their initial development contributed to by local producers or service providers, and wind energy 25%.

The legal challenge is politically challenging for both parties as the two nations are currently concluding a Free Trade Agreement. The EU decided to bring the dispute on the basis that negotiations had failed to bring about a resolution. No ruling has yet been made in relation to Japan's action on the matter; the WTO Dispute Settlement Board deferred the establishment of the panel requested by Japan on June 17, 2011.

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