Greening electricity through taxing: An analysis of GATT constraints

This paper examines the legal feasibility of different design options for implementing a differentiated electricity tax based on renewable energy (RE) certificates aimed at promoting green electricity generation. It discusses the issue of likeness in light of the recent WTO jurisprudence and looks at the possibility of justification of differentiated tax rates under the general exceptions of the GATT. It also scrutinizes the potential legal hurdles for the implementation of different tax design options including the use of certificates for RE tax exemption. It argues that the placing of a quota on the number of foreign RE certificates eligible for tax exemptions would likely affect the volumes of imported green electricity and therefore trigger a violation of GATT rules. At the same time, restrictions on the eligibility of RE certificates might be defended under WTO law if they are based on qualitative criteria, such as the attachment of RE certificates to green electricity flows or to a green electricity label that is equally available to domestic and foreign suppliers of RE electricity.