US efforts to accelerate the transition to green energy could take other big polluters out of the game. Much of the $430 billion anti-inflation bill signed into law by President Biden midweek will create business incentives to increase the nation’s solar, wind and hydropower generation. But there is a danger that, in the next few years, this will give them much more control over the international chain on which poorer countries depend, and before the significant benefits of increased investment and production make green technologies more accessible and cheaper internationally. Take a highly polluting country like India. Its goal of 280 gigawatts of solar power by 2030 is achievable because current taxes of nearly Rs 2.5 ($0.031) per kilowatt-hour make this power source cheaper than domestic coal. Indian companies such as Adani Green Energy, US-listed ReNew Energy and Singapore’s Sovereign Wealth Fund-backed sovereign wealth fund Greenko have relied on foreign suppliers and market forces to get such a steep discount.

Washington’s new tax credits and subsidies are likely to make manufacturers of photovoltaic systems, gas turbines and other similar infrastructure look to the US, expecting much higher revenues. The subsidies will roughly double the internal rate of return that solar and wind projects pay out to contractors and investors, according to a study by the Boston Consulting Group. In a world where supply chains for wind and solar infrastructure components are already inelastic and contracts are mostly short-term rather than long-term, it makes sense that suppliers want to win too. If Indian companies are now forced to compete with US tax-adjusted prices, the country’s solar taxes would jump to nearly Rs 3.5, an industry executive told Reuters, and those levels would once again make the cost of producing electricity from local coal competitive. .

India is trying to leverage the capacity of its own factories to produce photovoltaic systems by imposing tariffs on imports, mostly from China, and offering five-year incentives. But these efforts pale in comparison to the broader decade-long U.S. program. Know-how in the field of clean energy technologies is mainly located in China, Europe and the USA, but there is little or no transfer to other countries. Finally, rich countries are still far from meeting their $100 billion a year commitment to help poorer countries cope with the effects of the climate crisis.