Government Support for Renewable Energy and WTO Law:

The Case of the UK’s Contracts for Difference Scheme

Arwel Davies

 

ABSTRACT: It is clear that some degree of government intervention is required to accelerate the transition to renewable energy. Technologies to harness renewable sources such as wind and solar have higher up-front costs than non-renewable sources like coal and gas. Left to the market, investment would continue to flow towards fossil fuels with the associated negative implications for climate change. Governments are faced with difficult policy choices. Precisely what form should the intervention take? Are there opportunities to blend the required transition with industrial development objectives such as bolstering domestic capacity and expertise in the goods and services associated with renewable technologies? Part of the challenge here is to understand how world trade law constrains these policy choices. The overall picture is complex. Overlapping treaty provisions raise difficult questions of interpretation and application. The question is whether there is a navigable route for states to transition to renewables without breaching trade law obligations. The focus is on the UK’s primary initiative to support renewable energy infrastructure – the Contracts for Difference scheme.