Economic cooperation between India and Australia is set to open doors for investment in clean energy technology, though challenges persist in a competitive global market. Experts Vibhuti Garg and Shantanu Srivastava discuss the role that public funding and resource pooling could play in supporting manufacturing ambitions.
The recently announced Future Made in Australia Act marks a significant commitment to enhancing domestic clean energy supply chains through public finance. This initiative mirrors efforts in the United States, Europe, and India, offering subsidies and incentives to bolster domestic manufacturing and support key industries like green metals, green hydrogen, and critical minerals.
As nations plan to decarbonize their economies, ambitious targets are set in the power sector. Between 2021 and 2030, planned electricity generation from solar and wind projects outside China is expected to more than triple from 125 GW to 459 GW. Achieving these targets requires stable markets and resilient supply chains.
Today’s clean energy supply chains face challenges, including dependence on imports from a limited number of countries at key points. China currently dominates the market, supplying much of the world’s clean energy technology. To build resilience, countries dependent on imports must strategically invest in their supply chains, focusing on raw materials and minerals critical to clean energy technology.
Increased public funding is essential to de-risk innovation and attract capital to clean energy supply chains. Governments are drafting policies and incentives to promote domestic clean energy manufacturing. The US Inflation Reduction Act (IRA), for example, allocates almost $30 billion in production tax credits for the renewable energy supply chain. India’s production-linked incentive (PLI) scheme for module manufacturing aims to reduce imports and create domestic green jobs.
However, governments face challenges in using public finances to build supply chain resilience without imposing trade barriers. Developing countries like India must offer targeted incentives to attract private capital effectively. Collaboration is crucial in achieving clean energy goals and maintaining competitive neutrality.
The Australia-India Economic Cooperation and Trade Agreement (ECTA) is a significant step, aiming to help Indian companies invest in critical minerals mining in Australia. The ECTA also encourages technical collaboration between Indian and Australian firms on mining technology. Creating a shared pool of public finance could ensure adequate capital for such arrangements, attracting contributions from multilateral development banks (MDBs) and facilitating strategic cross-border investments.
India’s National Investment and Infrastructure Fund (NIIF) recently established a bilateral fund with Japan to finance low-carbon technology in India. A similar fund could be set up in collaboration with Australian counterparts to further clean energy ambitions.
#ICTTMNews #BreakingNews #SupplyChainNews #CleanEnergy #IndiaAustralia #EconomicCooperation #GlobalTrade
