Disciplining Clean Energy Subsidies to Speed the Transition to a Low-Carbon World

Mexico - 24 April 2018

The purpose of multilateral disciplines on subsidies is to avoid trade distortions, in order to
increase production efficiencies through competition. However, this objective may be defeated due
to defects in the structure of the WTO Agreement on Subsidies and Countervailing Measures
and the resulting interpretations of WTO tribunals in cases involving clean energy subsidies.
These defects, together with inefficient design of energy markets, could slow the transition to clean
energy sources. However, the necessary reforms to the multilateral subsidies regime and energy
markets are unlikely to be implemented any time soon, in the absence of a successful formula for
multilateral negotiations. In this environment, the private sector will have to take the lead in
making the transition to clean energy sources, in order to mitigate the disastrous effects of climate
change to the extent that this goal remains attainable.

Author