Renewable energy and WTO subsidy rules: The feed-in tariff scheme of Switzerland

Abstract

In recent years, States around the world have been starting to facilitate the production of renewable electricity by providing subsidies to producers in order to address climate change. As a consequence, policy makers have been developing various forms of instruments to support renewable electricity production. Amongst them, a popular tool is the feed-in tariff (FIT), which is currently used by around 73 countries. Switzerland is one of the 73 countries, which has been using a FIT-scheme as an instrument to support the production of renewable electricity since 2009. According to art 7a.1 of the Swiss Energy Act network operators are obliged to take all electricity from producers of renewable electricity and to compensate them with a fixed tariff. With the new energy strategy 2050 the State support of renewable energy has become even more important. Interestingly, renewable energy composes already a majority of the total electricity production in Switzerland, namely from hydropower. This research aims to contribute to the current discussion of the compatibility of FIT-schemes with WTO subsidy rules. By analysing Switzerland’s FIT-program, the research question is asked whether the current WTO subsidy regime allows Switzerland enough policy space to pursue its objective to raise its production of green electricity by using a FIT-program.