EU State Aid Law, WTO Subsidy Disciplines and Renewable Energy Support Schemes: Disconnected Paradigms in Decarbonizing the Grid

Abstract

Liberalization of the European internal market for energy by means of unbundling and third party access alone is not enough to make renewable energy on a par with fossil fuels. To increase the production of renewable energy in its Member States, the EU has in place a set of legal instruments to promote the scale up of renewable energy production through i.e. setting binding targets for renewables and providing a legal framework for support schemes. However, while arguably consistent with EU disciplines pertaining to State aid, EU support schemes can easily fall foul of WTO subsidy disciplines. This article argues that EU and WTO law are disconnected paradigms in this respect: EU legislation by its design at-tempts to legitimize support schemes for renewable energy, not necessarily taking into account their consistency with the WTO ASCM. WTO law, on the other hand, currently provides too little space for subsidies that further legitimate policy goals, such as environmental protection and climate change mitigation.

Keywords: EU Law; State Aid; WTO Law; ASCM; International Trade Law; International Economic Law; Energy Law; Energy Market Liberalization; Unbundling; Subsi-dies; Renewable Energy, Environment; Sustainable Development; Externalities; Exemptions; Exceptions

JEL Classification: D62; F1; F13; F15; F18; F19; F5; F55; F64; F68; H23; H40; H41; H71; K00; K1; K19; K21; K32; K33; L50