Overcoming Barriers to International Investment in Clean Energy

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The perceived potential of clean energy to support employment in the post-crisis recovery context has led several OECD and emerging economies to design green industrial policies aimed at protecting domestic manufacturers, notably through local-content requirements (LCRs). These typically require solar or wind developers to source a specific share of jobs, components or costs locally. Such requirements have been designed or implemented in the solar- and wind-energy sectors in at least 21 countries, including 16 OECD countries and emerging economies, mostly since 2009.

Empirical evidence gathered in this report shows however that LCRs have actually hindered international investment across the solar PV and wind-energy value chains, by increasing the cost of inputs for downstream activities. This report also takes stock of other measures that can restrict international investment in solar PV and wind energy, such as trade remedies and technical barriers. This report provides policy makers with evidence-based analysis to guide their decisions in designing clean-energy support policies.



Other policy-related financial, trade and technical barriers to clean-energy investments

This chapter discusses a number of policies other than local-content requirements that may also hinder international investment in the solar-PV and wind-energy sectors. Three types of measures are discussed at length in view of their importance and the availability of extensive research: (i) domestic incentive measures, that may differentiate between domestic and foreign investors, such as preferential access to finance, export subsidies, preferential tax incentives, and government provision of subsidised inputs; (ii) trade remedies, such as countervailing and anti-dumping duties, which are permitted by WTO rules under specific circumstances; and (iii) technical regulations and standards. A number of other measures are also briefly discussed. These include: (i) applied import tariffs, (ii) regulatory restrictions on FDI, (iii) cumbersome administrative procedures; (iv) restricted access to the grid; (v) non-transparent procurement processes; and (vi) trade-related investment measures (TRIMS) other than LCRs. The chapter discusses the mechanisms by which these measures may adversely affect international trade and investment, and explains the implications for policy makers.


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