Japan Claims Ontario’s Feed-In Tariff Program Violates WTO Rules

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The Ontario Power Authority’s feed-in tariff program is quite popular in the province, which explains the increasing number of solar projects and the growing need for solar certification courses to train qualified installers.  Nevertheless, the program is being strongly criticized by Japan, who has formally started a World Trade Organization (WTO) dispute with Canada.  The request for consultations was received by the WTO on September 13, with Dispute DS412 specifically highlighting “Certain Measures Affecting the Renewable Energy Generation Sector.”

Feed-in Tariff and microFIT Regulations Favor Local Solar Manufacturers

The controversy stems from the domestic content requirement of the feed-in tariff (FIT) program in which “wind projects greater than 10 kilowatts (kW) and all solar PV projects [must]include a minimum amount of goods and services that come from Ontario.”  The minimum domestic content level for solar PV projects between 10kW and 10,000kW is currently 50%, and starting in 2011, this threshold jumps up to 60%.

Solar PV projects generating under 10kW of clean energy fall under the microFIT program and have generated complaints from the Japanese as well.  These small projects have their own minimum domestic content level, which is presently 40%, but it will also go up to 60% in 2011.  For both the feed-in tariff and microFIT programs, these guidelines are more than a recommendation – they are mandatory eligibility criteria and must be respected to obtain contracts and the associated benefits.

Japan Claims Feed-in Tariff Requirements Disregard WTO Rules

Ontario’s strategy, which helps create local jobs, is seen as an unfair advantage by the Japanese government.  The Ministry of Foreign Affairs of Japan issued a statement saying that “[the feed-in tariff’s]requirement for the use of locally made products violates the WTO’s rules that ban discrimination against products made overseas.”

“Solar panels or other equipments exported by Japanese companies to Ontario are less favorably treated than those locally produced,” insists the Japanese Ministry of Economy, Trade and Industry (METI) in its request for WTO consultations.  According to the METI, Ontario is violating Article III of the General Agreement on Tariffs and Trade, Article II of the Trade Related Investment Measures Agreement, and Article 3 of the Subsidies and Countervailing Measures Agreement.

FIT and microFIT Contracts Make Solar Courses More Relevant

While Japan feels disadvantaged by the Ontario’s tariff programs, the province has greatly benefited from them.  Small and large-scale renewable energy projects are flourishing across the province, and numerous foreign companies are investing in the area to ensure that they qualify for Ontario’s domestic content requirements.

In response to growing demand for a specialized green workforce, solar courses are becoming increasingly popular throughout the province.  Jacob Travis, Director of Canada’s only ISPQ-accredited solar training school, Ontario Solar Academy, notes that, “Whether the materials come from Tokyo, Toronto, or Berlin, the province needs qualified solar professionals who can implement the technology.  Absent an experienced green workforce, debates over domestic content quotas become irrelevant.”

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