The Trade And Environment Debate On The Regulation Of Energy Subsidies In The Wto

The multilateral rules on subsidies have come under intense scrutiny in the wake of rising trade disputes over renewable energy subsidies. The sudden surge in the number of trade disputes and countervailing duty actions against renewable energy support programs has raised concerns that the multilateral subsidy rules may stand in the way of global efforts to promote the development and deployment of renewable energy sources. This paper shares these concerns, but argues that they are only one side of the environmental concerns that arise from the regulation of energy subsidies in the multilateral trading system. Energy subsidies play a dual role from a sustainable energy transition perspective. While renewable energy subsidies tend to help accelerate the transition, fossil fuel subsidies do exactly the opposite. If the multilateral subsidy rules are to help accelerate but not hinder the transition, then they should not only allow governments to subsidize renewables but also discourage them from subsidizing fossil fuels. This paper attempts to answer why the regulation of fossil fuel subsidies in the multilateral trading system received scant scholarly attention in the wide-ranging debate on trade and the environment.