The decision to drop the MGU-H is a "backwards step" for Formula 1's 2021 engine regulations, according to Mercedes' powertrain boss Andy Cowell.
Last year the FIA outlined a detailed plan to lose the thermal energy recovery element for the next generation of F1's hybrid engines, which it reiterated last month.
Honda technical director Toyoharu Tanabe said his company would "miss" the component, and F1's other engine manufacturers agreed they supported keeping the MGU-H when asked by Autosport.
Cowell, the managing director of Mercedes High Performance Powertrains, said it will remove "a lot of energy" from the engines.
He explained the MGU-H provides 60% of the electric energy used to power the other part of the energy recovery system, the MGU-K, and contributes 5% of the current engine's thermal efficiency.
"The MGU-H has been blamed for the lack of noise and for high complexity," said Cowell.
"It's been referred to as a miracle. There are four technology companies that have made it work.
"To make up the power difference we're going to have to increase the fuel flow rate, which is a backwards step.
"It's not progress. It feels like a backwards step when the development work has been done."
Cowell said engine manufacturers would now need to develop anti-lag systems for the turbocharged engines as the MGU-H is "the most marvellous anti-lag system because it gives you speed control".
He added: "We'll have to come up with various systems and devices and that will probably involve burning some fuel through the exhaust, which doesn't feel the most honourable thing to do as an engineer.
"But it's a balance between technology and entertainment and we've got to get that balance right."
Ferrari technical director Mattia Binotto said Cowell's examples were evidence of the MGU-H being a "fantastic, efficient component".
However, he said the need for compromise in pursuit of "better noise, simplification and costs" is why Ferrari "accept" the MGU-H will be removed.
"When you are dealing with compromises there are always different opinions," he said.
"It doesn't mean we need to standardise all the power unit components.
"It's important we maintain the challenge of these technologies and maintain the engine as a competitive differentiator between the manufacturers because that is the DNA of F1."
Renault's engine technical director Remi Taffin said all four manufacturers had outlined their desire to keep the MGU-H as part of an "initial proposal".
He claimed that there were now "alternatives", and Renault would find other uses for the technology.
"We are trying to have good discussions to go forward for keeping developing this power unit in a different way," he said.
"We did a lot of work on the MGU-H, it's working, it's a very nice part. It's not something we will put on the shelf and forget.
"We have other projects, we have Formula E.
"The MGU-H is not directly translatable but it's a high-speed motor, it's quite a unique technology, and we're not going to put that on the shelf."