The Provincial Government of Ontario, Canada, this week approved a bill eliminating local content requirements from renewable energy projects that wish to be eligible for the feed-in tariff (FIT) after pressure from Japan’s Ministry of Economy, Trade and Industry (METI).
In introducing its FIT program for renewable energy in May 2009, the Ontario Provincial Government of Canada stipulated that a certain percentage of the components used in any single installation be it wind of solar PV must deliver value to the province. In short, the government imposed local content requirements in order for eligibility to the highest level of the FIT.
Any developer that was importing solar panels or other equipment that was not manufactured in the province received a less favorable rate. At the time of the FITs’ introduction, solar PV projects in the province required 60% domestic content, according to the Ontario Power Authority (OPA). Ontario Energy Minister at the time, Bob Chiarelli, said that the measures were necessary to protect the 31,000 clean energy jobs in the province.
Japan’s METI, alongside EU complainants, took this matter to the World Trade Organization in September 2010, claiming that the local content requirement rules under the FIT program were inconsistent with the WTO Agreements to which Ontario and Canada were bound.
The WTO Panel’s findings were published in December 2012, in which they sided with METI and the EU, accepting Japan’s arguments that Ontarios actions under its FIT amounted to protectionism, and issued an additional report recommending that Ontario’s Provincial Government immediately act upon the decision. In May 2013, Canada lost its appeal to the WTO’s appellate body, which upheld METI’s and the EU’s original claim.
"The EU is a significant producer and exporter of wind and PV power but its exports to Canada could be much higher should the measure promoting use of domestic equipment be removed," the EU said at the time.
The case initially came close to a resolution in March this year with Ontario’s decision makers submitted a bill for the act for eliminating local content requirements. This initial bill was discarded in May, however, following the dissolution of the parliament of the provincial government.
But the WTO reports that last month, the new ruling party of the provincial government decided to submit the bill to parliament anew, with approval following in late July. On the same day as the ruling, the OPA announced that it will begin publishing a list of FIT contracts that it has terminated, in order to "increase transparency" whenever the OPA cancels its FIT support in lieu of contract conditions not being met.