TORONTO - Ontario's green energy ambitions appear to be pitting the country's biggest trading partners against Canada in a dispute over government subsidies for solar and wind power projects.

Both the United States and the European Union want to join consultations over a trade complaint made by Japan to the World Trade Organization, saying they have a significant stake in the discussions.

Even though the dispute is with Ontario, the federal government is ultimately responsible to defend the province because Canada is a signatory to the WTO, said International Trade Minister Peter Van Loan.

"We always want to maintain good trading relationships with our major partners, and we always want to make sure that our actions are World Trade Organization compliant," he said Friday in an interview with The Canadian Press.

"In this case, we certainly encourage the Ontario government to take advantage of the consultations phase of this process to seek a satisfactory resolution."

Earlier this week, both the U.S. and the EU argued in separate letters to the WTO that they have a "substantial trade interest" in the talks.

"The United States is a major innovator of renewable energy and related technologies and is a primary source of Canadian imports of products used in the production of renewable energy, including solar and wind energy," U.S. officials wrote Sept. 24.

The EU echoed those concerns in a Sept. 27 letter, adding that it also has a "systemic interest in the correct implementation" of international trade agreements.

"The renewable energy generation sector is of key interest for the EU importers, exporters and investors," it said. "At the same time, the EU attaches great importance to the development of renewable energies."

At the heart of the dispute is Ontario's feed-in tariff program -- or FIT -- which set a fixed price for electricity generated by renewable energy projects, such as wind turbines and solar panels.

The lucrative payments range from 13.5 cents per kilowatt hour for wind power to 80.2 cents per kilowatt hour for small, rooftop-mounted solar projects.

But companies are required to have a certain percentage of their project costs come from Ontario goods and labour, which Japan argues violates Canada's international trade obligations.

For wind projects that generate more than 10 kilowatts, the made-in-Ontario requirement starts at 25 per cent and increases to 50 per cent by 2012. The requirements for large solar panel projects start at 50 per cent and increase to 60 per cent by 2011.

Japan, which made the complaint earlier this month, has asked for consultations with Canada -- the first step in the dispute resolution process. If consultations fail, the complaint goes before a panel which will ultimately hand down a ruling.

Ontario Energy Minister Brad Duguid said Friday he's confident the legislation is consistent with its trade obligations and won't damage the province's relationship with its trading partners.

"We have become if not the leader, one of the leading jurisdictions when it comes to attracting renewable energy and building a renewable energy economy," he said in an interview with The Canadian Press.

"So we're not surprised that it's attracting international attention. In fact, we've known for some time that we are seen as a world leader, and as such, it's going to get these kind of challenges from time to time."

The complaints are another blow to the Ontario Liberals, who tout their Green Energy Act as key to their plans to create thousands of new jobs and reduce the province's dependence on dirty coal-fired power generation.

It has already signed a $7-billion deal with Korean giant Samsung to build wind and solar farms, along with four plants to manufacture components for green energy projects.

But the Liberals have come under fire for soaring home electricity costs, with opposition parties blaming the government's green energy policies -- as well as July's addition of the harmonized sales tax -- for rising costs.