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Ontario scraps local content rules for green energy after WTO ruling

The Toronto Star reports, “Ontario will no longer require renewable energy developers to use local suppliers, says energy minister Bob Chiarelli. The move, announced Wednesday, is not a surprise, since the province had lost a challenge before the World Trade Organization (WTO) on its local content rules. …The WTO had ruled earlier this year that the Ontario policy discriminates against foreign suppliers, putting the Liberals in a dilemma. Wednesday, the Liberals decided not to resist.”

“When originally announced by then-energy minister George Smitherman, Ontario’s green energy policy had been sold in part as a means to create jobs and businesses in Ontario. In order to qualify for attractive ‘feed-in tariff’ energy prices, renewable energy firms had to buy defined percentages of their inputs in Ontario. …The Liberals had promised to create 50,000 jobs in the renewable sector. By their own count, the number stands at 31,000, though many were short-term construction jobs.”

“Since the new policy will require legislative changes, the Liberals will need to win the support of one of the opposition parties in the minority Legislature. Peter Tabuns, energy critic for the New Democrats, said his party will have to study the proposal more closely before deciding whether to support it. …Lisa Macleod of the Conservatives also said it’s too soon to take a position on the Liberal proposal.”

The Council of Canadians

When the WTO challenge was first announced in 2010, the Toronto Star reported, “Calling it a ‘test case globally’, Council of Canadians chair Maude Barlow (said) it threatens policies designed to decrease greenhouse gas emissions. ‘Why should the Ontario taxpayer be paying high rates for clean energy if it is going to the profit margins of big corporations from Japan or Europe?’ she asked. …Barlow said: ‘(Given a WTO challenge can take years) it is the chill effect that matters. While a dispute is being settled, other jurisdictions are loathe to start any similar program or pass any similar rule.'”

And, “Barlow (noted) the Green Energy Act is already under threat by the (Canada-European Union Comprehensive Economic and Trade Agreement) negotiations, pointing out the European Commission targeted the Ontario program in a leaked memo earlier this year, citing it as a bad example for the other provinces. …’The Ontario and Canadian governments should vigorously oppose this challenge at the WTO and halt (CETA negotiations with the EU) until it is clear such programs are protected.'”

In May 2012, we joined with Blue Green Canada, the Canadian Auto Workers, the Canadian Federation of Students, the Canadian Union of Public Employees, the Communications, Energy and Paperworkers Union of Canada, and the Ontario Public Service Employees Union to send an amicus curiae submission to the World Trade Organization calling upon the WTO to respect the priority of Canada’s international climate change obligations.

And this past November, trade campaigner Stuart Trew wrote, “The Council of Canadians was one of several organizations, including UNIFOR, the Canadian Union of Public Employees, United Steelworkers, the Ontario Public Service Employees Union, and Blue-Green Canada, that helped fund the Canadian Centre for Policy Studies report ‘Saving the Green Economy: Ontario’s Green Energy Act and the WTO’ by Scott Sinclair. It argues that the WTO ruling ‘is based on an overly restrictive interpretation’ of international trade rules, but that there are ‘options for Ontario to comply with the ruling while preserving the vital job creation component of the Act’.”

The issue is expected to be debated at Queen’s Park early in the new year.

A Friends of the Earth poll found that 73 per cent of Ontarians “feel that the World Trade Organization should not be able to override Ontario’s plans to encourage investment in green renewable energy while only 27% are of the opinion that it should.”

Further reading
WTO rules against Ontario’s Green Energy Act
WTO panel on EU challenge of Green Energy Act established
WTO director-general critical of Ontario’s Green Energy Act
Ontario’s Green Energy Act prompts ‘trade’ concerns