The European Union has decided to request the World Trade Organization (WTO) to initiate consultation with Canada regarding the policy put in place by one of its provinces, Ontario, in support of the local industry. As the negotiated solution initially sought by the EU did not succeed, the Commission has decided to move for a dispute settlement procedure within the WTO.

The Ontario Green Energy and Economy Act (OGEA) empowers the Ontario Power Authority (OPA) to develop programmes to encourage the use of renewable energy in the Canadian province of Ontario. Under this regime, the OPA has developed a feed-in-tariff (FIT) programme which allows it to buy renewable energy at an above market price, setting conditions that favour domestic products and services in order to benefit from this incentive programme.

This measure which constitutes a subsidy, is considered by the European Union to be in clear breach of the World Trade Organization (WTO) rules that prohibit linking subsidies to the use of domestic products. The EU believes that the OGEA is inconsistent with Canada's WTO obligations which make illegal to condition access to a subsidy to the use of domestic products.

The EU, which is firmly encouraging innovation and development in the renewable energy sector which represents such a high potential in job creation and economic development, has welcomed the commitment of Ontario to encourage their use, provided that this promotion of renewable energies is done in a manner consistent with international trade rules. The EU is also increasingly concerned by such measures taken by other trading partners. EU's challenge of Ontario's measures in renewable energy, join prior Japan's dispute settlement initiated before WTO.

EU Canada trade figures in renewable market

Exports from the EU into Canada in wind power and photovoltaic power generation equipment are significant, ranging from 300 to 600 million Euro in 2007-2009. In EU's point of view, these figures could be higher should the local content requirements be removed from the legislation in question.