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Climate Wars: EU Mulls ‘Green Lawsuits’ Against Chinese Renewable Energy Subsidies

Massive state subsidies are “squeezing out” European wind and solar companies from China’s renewables market, the head of EU Trade Commissioner Karel De Gucht’s cabinet has said, adding that court action should be considered against barriers to trade.

“We should use all the tools we have at our disposal to tackle barriers that distort the market,” Marc Vanheukelen told a European Policy Centre meeting last week (15 March).

“We may take to court countries that we don’t think are playing fairly,” he added, in a general reference to unfair practices by any of the EU’s trading partners.

But analysts will watch to see if EU lawyers start addressing envelopes to Beijing.

China looked at climate issues from a trade and industrial policy perspective, Vanheukelen said.

“They want their industry to grow. They invite US and EU companies in. They loosely interpret intellectual property rules, then they produce the technology more cheaply themselves and close the market,” he complained.

China Inc.

“That’s China Inc. That’s how they grow. So they’re not going to lower tariffs just like that. That’s not how China works,” he said.

Chinese spending on renewable energy has soared in recent years, as the country seeks to meet its target of providing 15% of energy consumption from renewables by 2015.

In 2010, China overtook the United States as the global leader in installed wind power capacity – by 41.8 GW to 40.2 GW – and it has provided $30 billion in loans and subsidies to its solar power companies.

China says that it has no choice but to invest on this scale if it is to meet the climate goals which the UN Framework Convention on Climate Change insists are needed. But European renewable energy companies claim that they are being denied a fair slice of the green Chinese pie.

“Talk to EU wind and solar energy companies – the story isn’t a happy one,” Vanheukelen said. “They’ve been squeezed out of the market because subsidies for Chinese companies are huge.”

Anti-dumping suit

In late 2011, the German company Solarworld AG announced a $1-billion ‘anti-dumping’ suit against Chinese firms operating in the US. Their spokesman told EurActiv that similar measures were being planned against Chinese companies in the EU.

Vanheukelen denied that barring products from the EU market would be “green protectionism” and argued that other countries resorted to “environment-based trade barriers” more than the EU.

But he also noted that there was “not much traction in the WTO” for lawsuits currently and called for the environment rulebook to be re-written.

“It is a new issue. Trade rules for the environment don’t exist yet. The WTO needs to tackle it after Doha,” he said.

“These rules must be written. We’re happy to contribute to the political debate once it has begun in Geneva. But we’re still a long way from that,” he said.

EurActiv, 21 March 2012