The United States is suing India because of its solar program

From ToxicLeaks

Although the United States and India were just part of the COP21 negotiations to reduce greenhouse gas emissions, they are currently entangled in a World Trade Organisation (WTO) dispute around renewable energy ! The United States has complained to the WTO that India's solar program wasn't respecting free trade regulations and that American companies were at a disadvantage. In a staggering move, the WTO ruled in favor of the United States on February 24th. A clear sign that key players like the US and the WTO and world regulations haven't adapted to 21st century priorities : fighting global warming.

A solar program at the heart of India's pledge to reduce emissions[edit | edit source]

What is the object of the dispute ? India's National Solar Mission, a program designed to kickstart India's solar capacity. Right now, India's energy mix relies heavily on coal, which represents 44 % of the consumed energy. Renewable energies like solar or wind only represent 2 % of the energy mix. But since India started the program, solar energy had been expanding. A large amount of solar panels has already been commissioned, it amounts to a capacity of over 5,000 megawatts.

The Indian government is on track to build up a 100,000 megawatt solar energy capacity by 2022, which would exceed the solar capacity of the five current solar energy leaders in the world. This solar energy is supposed to replace part of the coal power stations and is therefore a key element in India's contribution to the COP21 conference. When US President Obama met Indian Prime Minister Modi in January 2015, the solar energy program didn't seem to be an issue. The two leaders issued a joint statement "emphasizing the critical importance of expanding clean energy research, development, manufacturing and deployment, which increases energy access and reduces greenhouse gas emissions." The document also indicated that "the US intends to support India's [solar power] goal by enhancing cooperation on clean energy and climate change." These talks that prepared the COP21 seemed to reflect the agreement between the USA and India on the issue of energy. Which is what makes this dispute so stupid and so dangerous. Because the hardest part was not to seal the COP21 agreement, the hardest part will be to maker sure everybody honors it.

US procedure at WTO because of “buy local” rule[edit | edit source]

Indeed this dispute looks as though it comes from another planet, after all the big speeches about preserving the world from global warming. Obama may have moved us by declaring that he didn't “want [his] grand kids not to be able to swim in Hawaii or not to be able to climb a mountain and see a glacier because we didn't do something about it," his administration is still the one who launched a complaint against India's solar program to the WTO in 2014. Indeed the Obama administration contended that the Indian solar program was discriminatory to American companies because it reserved subsidies to power companies who used solar components made in India. This is highly hypocritical on at least three levels. First of all, it takes quite a nerve to ask India to make a big effort to follow a responsible path to development (which the US never did by the way !) and yet complain that the Indian government is devising policies that encourage the development of a national solar energy industry !

Secondly, even the WTO recognized that "imported cells and modules currently have a dominant share of the market for solar cells and modules in India", which means that foreign companies still succeed in selling solar panels components to India. Finally, the Obama administration is asking India to follow a rule that half the states in the US are currently not respecting. As it happens, these states also have “buy-local” rules in renewable energy programs and these rules contribute to creating an economic ecosystem around these renewable energies. By filing this complaint, the US could very well cause a retaliatory case that would rule against the “buy-local” rule in these states. And then everybody would lose, except the global corporations that are big enough to compete in every country !

This proves that trade regulations are completely ill-adapted to current issues, namely the fight against global warming[edit | edit source]

On February 24th, the WTO ruled in favour of the US. The world organisation agreed that India's program gave “less favorable treatment” to foreign companies. This ruling is very bad news for the implementation of the COP21 agreement and it reflects the fact that global trade rules are stifling the environmental transition that we all need to see on a global scale. Greenpeace has criticised the ruling and is calling the US to drop the complaint as a gesture of goodwill, according to Pujarini Sen, Greenpeace India campaigner : "Pursuing this WTO challenge could hamper India's ambitious solar programme" at the time it has finally decided to engage in energy transition. And as the second most populated country in the world (pretty soon the first), the evolution of the energy mix of India is a key issue in preventing global warming.

This was precisely India's argument, that this program was critical to its COP21 pledge to limit carbon emissions. However, the WTO contended that this pledge didn't authorise India to violate trade rules. In other words, trade rules are more important that the international deal that could save us all for global warming and the catastrophic climate disruption that would follow. This reflects the outdated framework that is being followed to tackle these trade disputes. Clearly, in our era of environmental crisis and limited resources, it's time to start changing the rules we follow and to make environmental preservation our top priority. Not just something we put in speeches. And if we want to achieve the energy transition then we must allow policies that support renewable energy industries like “buy-local” rules. These rules foster the development of new companies in the field of renewable energy and create economic opportunities for workers. Consequently, it increases the democratic support for the energy transition because it also improves people's lives on an economic level. And that's the way it should be. And that's why this ruling is a terrible blow to the hopes created by the COP21. We can only hope that the US will drop the complaint and finally be consistent with the ideals voiced by its president.