The EU is challenging the UK’s stance on awarding subsidies to offshore wind projects that favour local content over imported components.
The European Commission has requested that the World Trade Organisation (WTO) open dispute settlement consultations into the UK’s “discriminatory” Contracts for Difference (CfD) scheme, which it argues applies a local content criterion on a project’s eligibility for receiving government support.
This in turn moves investment away from the EU, leads to losses in efficiency and raises prices for consumers making the renewable energy transition more difficult and costly, it claims.
The EU has said it has raised its concerns with the UK on several occasions “to no avail” and is now escalating its challenge as it believes the policy breaches the WTO’s national treatment principle.
Under the principle, the WTO prohibits members from discriminating against imports in favour of domestic products.
The EU can ask the WTO to set up a panel to rule on the matter if the consultations do not lead to a “satisfactory solution” within 60 days.
A Commission spokesperson said: “The UK maintains the local content criterion. The EU is, therefore, bringing the matter to the WTO and hopes that it can be resolved swiftly.”
A UK government spokesperson said: “We are disappointed that the Commission has taken this course of action at a time when we are focused on increasing our energy security and supply of home-grown renewable energy.
“It is particularly disappointing that the EU has chosen to initiate the dispute now, considering the level of collaboration between the UK and the EU in the face of Russia’s illegal invasion of Ukraine.
“The UK abides by World Trade Organisation law and will rigorously contest the EU’s challenge.”