Today, the World Trade Organization (WTO) ruled against India’s appeal to a February decision against buy-local policies in the country’s ambitious solar energy initiative, according to an announcement from the Sierra Club.
The initiative, which at its base offers solar companies government subsidies and long-term contracts, has already fostered the development of more than 8 GW of solar power in India, the group says. The initial complaint to the WTO was filed by the United States in 2014.
This ruling follows on the heels of India’s filing its own complaint with the WTO earlier this week against the U.S.’ own buy-local policies in eight states’ clean energy programs.
The Solar Energy Industries Assocation (SEIA) notes that today’s report from the WTO’s appellate body affirms the U.S.’ victory in its challenge to India’s localization rules, which discriminated against imported solar cells and modules under India’s National Solar Mission.
“This is an important victory for the U.S. solar industry and America’s hard-working 209,000-plus solar employees,” said Christopher Mansour, vice president of federal affairs for SEIA, in a statement. “The National Solar Mission’s local content requirement unfairly discriminated against U.S. manufacturers, and today’s decision will help even out the playing field.”
In a statement from the Sierra Club, Ilana Solomon, director of the group’s responsible trade program, added, “Today’s final ruling has undermined a successful solar initiative slated to bring us one step closer to tackling the climate crisis while creating local clean energy jobs. Yet the WTO has chosen to look beyond the world’s need for clean, modern, sustainable sources of energy – demonstrating the very real dangers harmful trade cases pose for our environment, our air, our water and our climate.”
According to the Sierra Club, India’s National Solar Mission aims to reduce the cost of solar power through “rapid scale-up of capacity.” The program is a core component of the country’s contribution to the Paris agreement.
Under the program, solar firms can secure government funding for project costs and long-term contracts to sell electricity to the government; however, some such benefits are contingent on using solar cells and modules manufactured in India. This “buy-local” requirement is designed to boost India’s capacity to domestically manufacture solar panels, the Sierra Club explains, adding that only a small fraction (reportedly, 10%) of India’s target solar capacity is slated to be covered by buy-local provisions. This means the country’s solar cell market remains significantly open to U.S. firms, the group says.
The United States officially launched its WTO case against the buy-local provisions of India’s solar program in 2014. In February of this year, the WTO ruled against the provisions by arguing that they “accord less favorable treatment” to imported solar components but also acknowledged that “imported cells and modules currently have a dominant share of the market for solar cells and modules in India.”
India appealed the ruling in April. In today’s ruling on the appeal, according to the Sierra Club, the WTO rejected India’s argument that the buy-local provisions of its solar program were “necessary to secure compliance” with India’s “obligations relating to climate change” and implied that no challenged policy could be justified as “necessary to secure compliance” with the United Nations Framework Convention on Climate Change.
The group says India has no further option for appeal and now must decide whether to alter its solar program to avoid WTO-authorized trade sanctions from the U.S.
“We applaud the Obama administration and the Office of the United States Trade Representative for their hard work ensuring the advancement of clean energy worldwide,” continued SEIA’s Mansour. “Now that the litigation is finally behind us, our hope is that India will quickly come into WTO compliance, and we look forward to a path where the solar supply in both our markets can grow.”