National Climate Change Policy: Are the New German Energy Policy Initiatives in Conflict with WTO Law?

This paper addresses German energy policy instruments and their compatibility with WTO rules. Germany and the EU are forerunners in international climate change policy and driving forces behind the 1997 Kyoto Protocol. German energy policy includes approaches to foster electricity generation from renewable resources. Our major question is whether both the policy tools currently applied (standards, taxes and subsidies) and those under consideration (labels, green certificates and border tax adjustment) are compatible with WTO rules. Our findings are that currently neither the design nor the application of the policy instruments are in conflict with WTO rules. However, the setting of production standards for electricity supply is the crucial issue in this debate and if trade in electricity increases, so will the potential for conflict. Rejecting imports because of the way electricity was produced could lead to disputes and to a need for settlements by the WTO legal system. Moreover, when introducing tools like green certificates or border tax adjustments, it is important to find the balance between effectively fostering the reduction of global emissions and eligibility under WTO law.Energy policy; World Trade Organization; global environmental policy; processes and production methods; labels; green certificates; taxes; border tax adjustment; subsidies.

National climate change policies and WTO law: a case study of Germany's new policies

This article analyses the relationship between national climate change policy instruments and WTO rules with particular emphasis on the case of Germany. Our main finding is that national policies whose aim is to reduce greenhouse gases can be brought into compliance with international trade law. Compliance can be achieved, first, through various methods of labelling electricity from renewable resources. Second, it can be achieved through trading systems for green certificates that respect basic WTO principles. Third, it can be achieved through energy taxes. To offset the competitive impacts of such taxes, border tax adjustments are a possibility. Although WTO law has not yet clearly defined the eligibility of border tax adjustments for energy taxes, the balance of evidence suggests that it would support such adjustments under certain circumstances. Fourth, compliance with WTO rules can be achieved through financial incentives to the producers of energy from renewable sources which are conferred in such a way that they do not pass through the hands of the government. Hence, climate change policies can even rely on subsidies (in the economic sense) without getting into conflict with WTO rules. Fifth, when compliance cannot be achieved, national policies aiming at international environmental protection can claim an exception under GATT Article XX (b) or (g) if measures are not applied in an arbitrary or discriminatory manner. In addition, countries should further strive to find solutions to the global climate change problem in the Kyoto process.

National climate change policy Are the new German energy policy initiatives in conflict with WTO law?

'This paper addresses German energy policy instruments and their compatibility with WTO rules. Germany and the EU are forerunners in international climate change policy and driving forces behind the 1997 Kyoto Protocol. German energy policy includes approaches to foster electricity generation from renewable resources. Our major question is whether both the policy tools currently applied (standards, taxes and subsidies) and those under consideration (labels, green certificates and border tax adjustment) are compatible with WTO rules. Our findings are that currently neither the design nor the application of the policy instruments are in conflict with WTO rules. However, the setting of production standards for electricity supply is the cru-cial issue in this debate and if trade in electricity increases, so will the potential for conflict. Rejecting imports because of the way electricity was produced could lead to disputes and to a need for settlements by the WTO legal system. Moreover, when introducing tools like green certificates or border tax adjustments, it is important to find the balance between effectively fostering the reduction of global emissions and eligibility under WTO law.' (author's abstract)Im Mittelpunkt des Arbeitspapiers stehen die energiepolitischen Instrumente in der Bundesrepublik und ihre Kompatibilitaet mit den WTO-Regeln. Die deutsche Energiepolitik umfasst u.a. Ansaetze zur Foerderung der Elektrizitaetserzeugung durch erneuerbare Ressourcen. Die zentrale Frage der Studie richtet sich darauf, ob sowohl die bereits bestehenden Politikwerkzeuge (Standards, Steuern und Subventionen) als auch die geplanten Instrumente (Labels, gruene Zertifikate und Grenzabgaben-Anpassung) mit WTO-Regeln vereinbar sind. Im Ergebnis wird zwar festgestellt, dass gegenwaertig weder die Ausrichtung noch die Anwendung von Politikinstrumenten in Konflikt mit den WTO-Regeln stehen. Dennoch stellt das Setzen von Produktionsstandards fuer die Elektrizitaetsversorgung nach Meinung der Autoren eine kritische Frage in dieser Debatte dar, und wenn der Handel mit Elektrizitaet zunimmt, wird auch das Konfliktpotenzial steigen. Im Falle der Einfuehrung von Werkzeugen wie gruenen Zertifikate oder Grenzabgaben-Anpassungen ist es nach ihrer Einschaetzung wichtig, die Balance zwischen einer effektiven Foerderung der Reduktion von globalen Emissionen und einer Uebereinstimmung mit WTO-Recht zu finden. (ICIUebers)German title: Nationale Klimapolitik: stehen die neuen energiepolitischen Initiativen Deutschlands in Konflikt mit dem WTO-Recht?SIGLEAvailable from Deutsches Institut fuer Wirtschaftsforschung -DIW Berlin-, Berlin (DE) / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman