Local-content requirements in the solar- and wind-energy global value chains

This chapter describes the increasing use of local-content requirements in green industrial policies. It discusses the arguments for and against such policies and describes the key findings of recent evidence-based analysis regarding their possible impacts on international investment in different segments of the global value chains. The analyses include (i) a review of recent WTO disputes associated with the use of LCRs in solar and wind energy (ii) an overview of recent investorstate disputes (iii) results from a 2014 OECD Investor Survey assessing how leading international investors in wind and solar projects perceive the impacts of policies that differentiate between foreign and domestic investors (iv) results from a consultation with key private and public stakeholders in solar and wind energy hosted by the OECD in December 2013 (v) results from a new econometric analysis conducted by the OECD to estimate the quantitative impact of LCRs on international investment flows to the solar- and wind-energy sectors (vi) findings from other quantitative analyses of the impact of LCRs on international trade and (vii) empirical evidence compiled from the literature on the effects of LCRs in several individual countries. Finally, the chapter discusses the policy implications of these research findings.