Starting this year, Ukraine will require 15 percent to 30 percent of clean energy technologies to be locally sourced in order to receive subsidies from its feed-in tariff program, increasing to 50 percent by 2014.

Many countries use domestic content requirements for vehicles, provide preferential treatment to domestic firms and use other means to help domestic companies. Such practices demonstrate what ITIF calls "green mercantilism." Whatever perceived benefit of these policies in the short term, they distort competition, create disincentives for innovative companies and slow the adoption of new technologies.