How the US just undermined India's local solar energy program

The World Trade Organization dealt a damaging blow to India's solar panel industry Wednesday, and it's all thanks to legality complaints from the US. 

Amit Dave/Reuters
Workers carry a damaged photovoltaic panel inside a solar power plant in Gujarat, India, July 2, 2015. India's $100 billion push into solar energy over the next decade will be driven by foreign players as uncompetitive local manufacturers fall by the wayside, no longer protected by government restrictions on the sector.

India can no longer pursue its ambitious renewable energy goals through local subsidies, the World Trade Organization (WTO) ruled Wednesday.  

Through government subsidies and long-term contracts, India’s National Solar Mission hopes to achieve 100,000 megawatts of solar capacity by 2022. India has already become a leader in solar-manufacturing by offering solar power developers cost breaks for building panels with Indian-made cells and modules. 

But the WTO ruled against India’s solar mission Wednesday, saying the country’s "localization" deals unfairly favor India’s own solar products over imported technology.

And here is the zinger that’s really making some renewable energy advocates angry: the WTO ruling only came about because the United States complained.

“Something very wrong is going on when again and again we are seeing trade rules hamper governments’ ability to [tackle] climate change,” Ilana Solomon, director of the Sierra Club’s Responsible Trade Program, tells The Christian Science Monitor in a phone interview Thursday. “India needs to be in the driver’s seat. It is not for the WTO to decide what’s in India’s best interest.”

In 2014, the US brought a WTO case against India, claiming the program’s “buy-local” rules discriminate against similar US solar products. WTO said they side with the US complaints Wednesday, and India’s program does in fact “accord less favorable treatment” to imported solar cells and modules. President Obama and his administration stand by their complaints Thursday, viewing Wednesday’s ruling as a victory for international trade law and the US renewable energy economy. 

“This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory ‘localization’ policies,” US Trade Representative Michael Froman said in a press release.

As President Obama sees it, rules are rules.

"One area where there should be no debate is that once we have set up trade rules, people have to abide by them," said the president.

Andrew Bates, Press Secretary for the Office of the US Trade Representative, tells The Christian Science Monitor that the US also had environmental reasons for bringing the case. For solar energy technology to advance across the globe, the Indian government can't discourage efficient and inexpensive equipment from other countries.

"As President Obama has repeatedly made clear, the United States strongly supports the rapid deployment of solar energy around the world, as does India," Bates tells The Monitor. "But these policies that discriminate against American solar exports have in fact had the opposite of their intended effect and undermined our shared efforts to promote clean energy."

But climate change activists say Wednesday’s ruling is yet another glaring example of archaic trade rules usurping necessary climate progress. 

“The ink is barely dry on the UN Paris Climate agreement, but clearly trade still trumps real action on climate change,” Sam Cossar-Gilbert, an organizer at Friends of the Earth International Economic Justice, said in a statement Wednesday. “Trade policy can not continue to be a hindrance: Governments must be free to implement sound climate policy.” 

And policing India’s local subsidiary system leaves the US open to accusations of hypocrisy. According to a 2015 study by Vanderbilt University law school professor Timothy Meyer, the US has 44 similar renewable energy programs in 23 states

“A lot of state governors and legislators basically feel exactly the way India feels: climate change is a major problem and local ability to develop renewable energy is imperative,” Dr. Meyer says in a phone interview Thursday. “The WTO doctrine needs to evolve to take into account the need to combat climate change and allow governments to have innovative policies that facilitate the creation of clean energy.” 

India told the WTO they needed to examine the country’s solar industry “in the context of the overall objectives of energy security and ecologically sustainable growth,” for which a thriving domestic solar panel industry was “essential.” And India defended the program as a means to fulfill their recently agreed upon United Nations Framework on Climate Change Convention obligations.  

The WTO disagreed. In their report, the WTO says they looked at India’s situation through a larger environmental lens but still can’t find necessary or essential justification. WTO law trumps UNFCCC agreements, ruled the organization.

And this is the most damaging outcome of Wednesday’s ruling, says Solomon. 

“It’s a warning sign for other countries who try to put local polices in place,” she says. Now developing and industrialized nations alike will think twice before enacting ambitious renewable energy programs. 

“Climate policies are subservient to trade rules,” says Solomon, “and not the other way around.” 

[Editor's note: The original version of this story was published prior to receiving a response from the office of the US Trade Representative.] 

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