EU takes Canada to court over Ontario's green energy plan

The European Union has launched a formal trade complaint against Canada, and specifically the province of Ontario, at the World Trade Organization. The EU disputes Ontario's backing for solar and wind energy projects that make use of locally manufactured equipment and services. Such practice is illegal under global trade rules because it gives unfair advantage to local producers.

"It is illegal to condition access to a subsidy to the use of domestic products," the European Commission said in a statement.

Ontario's Green Energy and Economy Act provides above-market prices for renewable energy through its Feed-in Tariff plan, as long as at least 40 per cent of the products used in developing solar energy are made in Canada: for wind generated power, the portion of Canadian-made products is 25 per cent.

Japan launched a similar challenge against Canada in June.  

Since Ontario launched its scheme in 2009, a number of domestic and foreign companies including South Korea's Samsung C&T have announced plans to set up multi-billion dollar operations in the province

The EU exports a "significant" amount of wind power and photovoltaic equipment to Canada, but argues that that amount would be higher without the restrictions imposed by Canada.

Canada is at present negotiating a free trade agreement with the EU. This most recent challenge to Canada's trade practices in the renewable energy field could be a barrier to that agreement, which the government has said could be reached by 2012.