The WTO Agreements and the Regulation of Energy Markets: Is there a good FiT?

This paper explores the consistency of three forms of energy procurement regulations with international law obligations. Specifically, it focuses on whether feed in tariff (FiT), renewable portfolio standard (RPS) and energy auction (EA) regulations constitute subsidies prohibited by World Trade Organization (WTO) treaty obligations. Conventional wisdom dictated that such regulations could be challenged before a WTO panel, insofar as they harmed trade partners and irrespective of the laudable objective they might pursue. A recent ruling by the WTO Appellate Body on the WTO-consistency of Ontario’s FiT regulation has turned this conventional wisdom on its head. Provided a WTO Member can show that its energy procurement regulation pursues an environmental purpose, which could not be otherwise be met in the absence of such regulation, it can effectively insulate itself against most WTO challenges. This paper analyzes the Appellate Body’s ruling in detail. It concludes that the ruling may embolden policymakers to legislate more aggressive energy procurement regulations safe in the knowledge that they are free from retaliation following an adverse WTO panel ruling