The World Trade Organization is investigating an Indian governmental program that requires solar energy producers to use Indian manufactured solar cells instead of imported products. Several U.S. environmental groups are pressing the WTO to not pursue action against India, saying that ending the program would threaten the ability of India to cut greenhouse gas emissions. The irony is that India’s green energy industry would be harmed if no action were to be taken, a blow to the environmentalists goal of increasing alternative energy use throughout the globe.
The WTO got involved in the program because it violates a core WTO principle that requires countries to treat foreign goods and services the same way that they treat domestic goods and services. India has argued that its solar policy, the Jawaharal Nehru National Solar Mission, falls under the rules that permit countries to exempt projects from non-discrimination obligations. Twelve environmentalist groups, including The Sierra Club and Greenpeace USA, have sided with India’s program and want the WTO to close the case. They fear that the case will thwart the Indian solar sector; a move that I believe is a major misstep as it does not align with their mission of a cleaner world with less pollution. This brings up an important question: why do environmentalists oppose free trade in solar panels?
In opposing the case against government intervention, they are insisting that governments should be allowed to tax, even ban, solar panels that are made cheaply by foreigners. They claim that governments can and should insist that people buy and install panels produced domestically, even if they are more expensive. You would think that those truly in support of a green revolution would want the cheapest solar cells, no matter where they are manufactured. Simple economics tells us that this interaction of price and demand will reduce the amount of solar panels installed and create less renewable energy in the end. This is exactly the opposite of the environmentalists’ main goal to reduce the amount of fossil fuels used.
This seems to be much more of a matter of upholding the laws of fair trade than protecting the environment with government initiatives and the fact that the conservationists have sided with the Indian government amazes me. It will be interesting to see what ends up happening in this case and the implications that it may have on not only the recent alternative energy revolution but also international business relations among all nations involved.