President Obama’s trip came on the heels of battering midterm elections in the US during which his Democratic party lost control of the US House of Representatives.
Even during the trip, controversy dogged the president as world leaders attending a G20 business summit in South Korea criticised the US over a new plan to further stimulate its still sluggish economy by having the Federal Reserve purchase an additional $600 million in debt and by a US proposal to limit “excessive imbalances” in world trade.
But in Mumbai (India) at least, President Obama had a very good visit, joining Indian Prime Minister Manmohan Singh to announce commitments to address climate change, ensure mutual energy security, and to build a clean energy economy that will drive investment, job creation and economic growth.
A year after they signed their first renewable energy-related initiative, known as the Green Partnership, both leaders described the US and India’s collaboration in the renewable energy sector as “indispensable”.
The new South Asia Clean Energy Fund will be managed by the Global Environment Fund (GEF), with at least $100 million of the new $300 million fund will be provided by the Overseas Private Investment Corporation, a federal agency created in the 1970s to help US businesses invest overseas and foster economic development in new and emerging markets.
The GEF will invest in solar, wind, hydropower, advanced bio-fuels and natural gas projects, primarily in India.
In addition to the broader fund, GEF announced the formation of an India-specific sub-fund in conjunction with the Indian Infrastructure Development Finance Company (IDFC) and other potential Indian investors targeting India-only investment.
The South Asia fund and the India sub-fund augment OPIC’s existing investments of nearly $300 million in other clean energy and energy efficiency projects in India.
“President Obama last year challenged the United States to take bold action to increase American investment in renewable energy and clean technology, both at home and abroad,” said OPIC President and CEO Elizabeth Littlefield, who accompanied the president during his three-day stop in India. “This OPIC-supported investment fund is a significant down payment on the President’s challenge.
Littlefield noted that announcement of the fund was the latest development in the ongoing OPIC effort to facilitate U.S. private sector investment in both India and renewable energy.
In May, more than 260 participants from 26 countries attended an OPIC renewable energy investment conference in New Delhi, designed to facilitate US private sector investment in clean technology.
But the clean energy fund wasn’t the only initiative announced by the president and prime minister; the two leaders also launched a Joint Clean Energy Research and Development Centre.
The centre will mobilise $100 million in public and private funding over five years ($25 million each from the US and India) to promote research and development on potential breakthrough technologies.
In its initial phase, the centre will focus on three broad areas – solar energy, advanced second generation bio-fuels, and energy efficiency in buildings.
For each of the three areas, grants will be awarded to a joint US-India consortium of partners such as government laboratories, universities, corporations and non-governmental organizations.
The US Department of Energy will coordinate with India’s Planning Commission on a peer-review process to select projects that are cutting-edge and transformational, and which meet both India’s and the United States’ needs in terms of clean energy and energy security.
President Obama and Prime Minister Singh also recognised the crucial role that can be played by the entrepreneurial and thriving private sector in both countries in promoting clean energy, launching a US-India Energy Cooperation Program to leverage business resources in both nations for commercial clean energy projects.
This initiative will be spearheaded by the US Trade Development Agency, which has managed a similar program launched between the US and China last year.
The US-India Energy Cooperation Program is expected to catalyse funds for rapid scale up of pilot projects and accelerate entrepreneurship in areas like smart grids, energy efficiency, solar and wind energy and shale gas.
For additional information:
(US)Overseas Private Investment Corporation
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