The WTO and Green Subsidies: Legal Tensions in the Climate Transition

Green subsidies have become an essential instrument of climate policy, supporting decarbonisation, technological innovation, and the transition to cleaner production. Yet under WTO law, these measures may also distort markets by affecting prices, competition, and trade flows. This paper examines the tension between climate objectives and subsidy discipline within the WTO framework. It argues that existing WTO rules regulate green subsidies through traditional trade based criteria, but provide only limited adaptation for climate specific concerns. As a result, governments seeking to promote renewable energy and low carbon industries must navigate a legal system that is designed to prevent trade distortion rather than to facilitate climate mitigation. The analysis shows that the conflict reflects a deeper structural mismatch between trade fairness and climate urgency. While WTO law remains important in preventing disguised protectionism, it does not fully resolve the regulatory challenges posed by green subsidies. Future governance will therefore require better alignment between trade rules and climate policy objectives.