The European Union has called on the World Trade Organization to declare the way the United Kingdom manages its offshore wind farm sector to be illegal, in a move that looks set to drive another post-Brexit wedge between Brussels and London.
The appeal to the global trade body known as the WTO follows the UK changing the way it decides which off shore wind farm projects should get government subsidies.
The change favors projects that use equipment made or assembled in the UK.
Brussels said that sort of favoritism for domestic producers is not allowed under WTO competition rules.
"The criteria used by the UK government in awarding subsidies for off shore wind energy projects favor UK over imported content," said the European Commission, the executive branch of the EU. "This violates the WTO's core tenet that imports must be able to compete on an equal footing with domestic products and harms EU suppliers, including many SMEs, in the green energy sector."
The rule change that sparked the dispute, which was made in December, "incentivizes operators to favor UK content in their applications", the EU insisted.
London responded by saying it will "rigorously contest" the EU's first appeal to the WTO since the end of the post-Brexit transition period in December 2020.
London will likely defend itself by saying Brussels similarly incentivizes projects that feature homegrown companies over those from overseas, The Telegraph newspaper reported.
The Financial Times quoted a UK government spokesperson as saying: "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 homegrown renewable energy."
The EU insisted the UK's prioritizing of projects with high levels of UK content could mean inferior equipment is used, which could lead to "losses in efficiency" and higher prices for consumers.
The bloc said that scenario would make "the transition to a secure supply of renewable energy more difficult and costly".
The UK has a large off shore wind farm sector, with five new projects established in the past 12 months generating 3,000 jobs and attracting 1.5 billion pounds ($2 billion) of private investment. But London has been eager to see the nation benefit more from its vibrancy.
RenewableUK, a green energy lobbying group, claimed recently only 29 percent of money spent on off shore wind farms enters the UK economy. A claim that prompted Prime Minister Boris Johnson to say he would like to see the proportion raised to around 50 percent.
London and Brussels now have 60 days in which to find a solution before the WTO appoints a panel of arbiters. The panel could then take around a year to form a legally-binding opinion.