Energy Subsidies and the World Trade Organization


In recent months the World Trade Organization (WTO) has seen increasing conflict over the rules for government support of the energy sector. Government subsidies for particular forms of energy have long influenced producers’ investment choices and consumers’ consumption patterns in ways that affect both international trade and the environment. Trade and environmental lawyers have thus closely watched the WTO’s efforts to develop rules on government support for the energy sector. This essay outlines recent activity in the WTO on subsidies for both traditional fossil fuels and the renewable energy sector. It also discusses the difficulties posed by the increased application of WTO subsidies rules to renewable energy subsidies at a time in which fossil fuel subsidies programs continue to elude significant WTO scrutiny. This discrepancy – caused in part by WTO rules on subsidies and in part by energy politics in a number of countries that have shifted support for renewable energy subsidies to local governments less skilled in drafting WTO-compliant programs – threatens to undermine the WTO’s ability to develop an environmentally-friendly jurisprudence on energy trade issues.