G-20 Sherpa, Amitabh Kant, says U.S. laws on renewable energy ‘protectionist’

Mr. Kant says long-term finance from multilateral banking institutions need of the hour to encourage green growth

The United States’ laws that subsidised domestic green hydrogen production were “against basic principles of free markets,” Amitabh Kant, G-20 Sherpa, said at the World Sustainable Development Summit here on Wednesday, organised by The Energy Resources Institute (TERI).

“The (U.S.) Inflation Reduction Act and CHIPS Act are the most protectionist in the history of American legislation since World War 2. By giving a production subsidy of $3 per kg to (local companies to) produce green hydrogen, to bring down the current costs of $7/kg, instead of sourcing from friendly countries such as India, Australia and South Korea, means being unable to achieve the size and scale required to encourage green hydrogen production,” he said in his address.

The U.S. Acts were passed into law last year to encourage domestic production, particularly in the sectors of semiconductor manufacturing and renewable energy. It also commits funding towards these sectors.

More than technology, Mr. Kant underlined, which Indian entrepreneurs were anyway capable of procuring, it was long-term finance from multilateral banking institutions that was the need of the hour to encourage global, green growth. “You need long-term lending up to 25-30 years. The developed countries have not lived up to their commitment of $100 billion per year made at Copenhagen [United Nations climate conference]. These institutions are not designed to be financing for Sustainable Development Goals and climate finance. They are from the Bretton Woods era and must transform and become indirect financiers for a long period. You need both the Sherpa track and the finance track along with political and administrative will for such energy transformation,” he said in his address. Bretton Woods refers to a post-World War-2 consensus led by the United States and several Western European countries that aided reconstruction of the latter’s war-ravaged economies as well as setting up of the International Monetary Fund (IMF).

The need for international finance echoed in an address by Sultan Al Jaber, the president-designate of the forthcoming Conference of Parties (COP) in November. “Not just billions [of dollars], but we need trillions. We must unlock more concessional finance and we need reform of financial institutions and multilateral development banks. At COP-28, transforming food and water systems will be given same attention as transforming energy systems and at COP-28 [we] must conclude agreement on doubling adaptation finance,” said Mr. Jaber who is also Managing Director of the Abu Dhabi National Oil Company as well as Masdar, a renewable energy company based in Abu Dhabi.