EU takes UK to WTO over “discriminatory” green energy practices

In a statement released on Monday, the EU challenged the UK over what it called “discriminatory practices” as part of Britain’s green energy subsidy scheme.

According to the EU, the criteria the UK uses to hand out subsidies for offshore wind energy projects has been favouring the UK over other competing import companies. The EU has argued this goes against World Trade Organization (WTO) regulations.

In the statement the bloc said it had tried to raise this issue with the UK several times “to no avail”. As a result, it has filed for initial formal consultations with both the UK and the WTO.

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The UK has 60 days to settle the dispute before the issue is escalated. Depending on Britain’s response, the EU challenge may become its first WTO dispute case since Brexit.

The Contracts for Difference scheme is the UK’s main way of supporting the growth of its low-carbon energy sector. The idea of the scheme is to financially support developers who face heavy upfront costs and long periods of time before they see returns on investments.

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In the Contracts for Difference scheme, renewable companies apply for funding in a ‘sealed bid’ process, and so far there have been three rounds of this bidding.

The EU’s criticism falls on the way the UK has been appraising these financial bids declaring that the UK, “applies a local content criterion to determine the eligibility of operators” which “ incentivises operators to favour UK content in their applications, to the detriment of imported inputs”.

The EU then said this alleged preferential treatment also slows down the rollout and expansion of green energy. 

The UK is not a part of the WTO’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA) - a system for settling WTO disputes which has been active since March 2020.

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