Energy is a bridge that has historically fostered the U.S.-India relationship. The reasons are many. Both economies focus on energy security, climate action, economic cooperation, and technological innovation.
Recent innovations in India offer new challenges and opportunities. The country has rapidly deployed renewable energy (RE) technologies to meet its stated Net Zero targets. This effort has exceeded its promises; 40% of India’s electricity now comes from renewable sources. And the nation’s other ambitious target— installing 450 GW—would triple this existing capacity in less than ten years.
Yet despite record-breaking advancements, India still faces a multiplicity of hurdles in achieving its Net Zero targets. It certainly can benefit from the historical ties that call upon strengthened cooperation with strategic partners such as the United States of America. Indeed, aligning with India’s G20 agenda of ‘Vasudhaiv Kuntumbakam’ or ‘One Earth, One Family’, deepening U.S.-India bilateral cooperation can be mutually beneficial, accelerating the transition toward shared climate goals.
Assessing the U.S.-India Energy Relationship
India’s energy transition is deeply interlinked with climate resiliency. Temperatures in the country in 2024 have risen to 52.8C in some regions, bringing heat strokes to a staggering 40,000 people and leaving 100 of them dead.
Amidst these soaring temperatures, the country has taken positive steps toward energy accessibility, affordability, and environmental sustainability. But the demand for power sufficient to address India’s cooling needs is set to surge drastically. Its existing infrastructure is nowhere close to addressing such evolving challenges, and the impacts affect underprivileged populations disproportionately.
The energy relationship between India and the U.S. is rooted in their aligning national interests in climate action and energy security, particularly diversifying energy supply chains and reducing economic dependency on China. Recent events bear this out. China’s role in aiding Russia in its war with Ukraine weakened already turbulent geopolitical ties with the US government. India’s relations with China have been worsening as well in light of escalating border disputes.
In response, the U.S. and India both have deployed policies reflecting what experts call the “new age of protectionism.” The U.S. Inflation Reduction Act (IRA) and CHIPS and Sciences Act aim to diversify supply chains and encourage domestic production, pushing its relationship with China into greater strategic interdependence. Similarly, India’s ‘Atmanirbhar Bharat’ (Self-reliant India) campaign aims to localize supply chains and limit government tenders to Indian suppliers.
Despite growing competition between the two nations, the U.S.-India energy relationship has several ongoing initiatives centering on technology, innovation, and distribution of RE technologies. In 2009, the two nations launched the Partnership to Advance Clean Energy (PACE), aiming to accelerate inclusive low-carbon growth by promoting R&D of clean energy technologies. And the US-India Clean Energy Finance (USICEF) mobilized finance to promote RE distribution from 2016 through 2023. Subsequently, the partner nations initiated the U.S.-India New and Emerging Renewable Energy Technologies Action Platform (RETAP) in 2023 to develop key technologies in the energy transition. The Strategic Clean Energy Partnership (SCEP) targets several RE facets including forming the public-private Energy Storage Task Force.
Strengthened Cooperation Can Accelerate Transition
In 2021, US-India bilateral energy commodities and equipment trade rose by $18.5 billion from $14 billion. It was a reflection of the two nations’ strong economic ties, and suggested room for further growth.
Perhaps the most glaringly apparent space for cooperation is US support for India’s ambition to become a manufacturing hub in South Asia as a possible alternative to China. The creation of private funding channels by the US to support public-private infrastructure capable of manufacturing energy commodities (from semiconductors to solar panels) in India is one path. However, because India substantially depends on sourcing raw materials from China, it is important to note that such initiatives would create only a partial diversification.
Such manufacturing arrangements can be aligned with partnerships to diversify the energy mix in both countries. Given the trade-offs where solar and wind fall short, the emergence of nuclear and green hydrogen technologies reflects that diversification of the energy mix will be crucial for countries to suffice their increasing energy needs away from fossil fuel dependency. The public-private Hydrogen Task Force which aligns with India’s National Hydrogen Strategy, is a great example of such technological ties. In line with the Civil Nuclear Cooperation Initiative, cross-country Public-Private Partnerships (PPPs) can be formed to deploy nuclear technology in India and support U.S. deployment. Indian companies like TATA Power have the potential to manufacture Small Modular Reactors (SMRs). Fulfilling India’s RE manufacturing hub dreams also will boost green jobs in the economy.
What can India do? First, it must strategically realign its Net Zero pathways to decouple its industries from GHG emissions. This is a challenge, however. Reducing coal in its energy mix, for instance, would require a huge investment in infrastructure and capacity building of daily-wage laborers to ease job transitioning. Thus, India and the US could form timely bilateral platforms for policy dialogues to share insights on aiding the communities adversely affected by the transition. The U.S. Inflation Reduction Act is a good model. It provides tax incentives to energy companies, funds job training, and provides financial assistance and health benefits to affected local communities. These communities should be at the center of planning their shared futures in the green transition.
India also must utilize its rising start-up culture by deploying technology-push and demand-pull policies. In its Long-term Low Carbon Development Strategy, India promotes Micro, Small, and Medium Enterprises (MSMEs) in energy efficiency and distribution towards a green economy. This provides a platform for the U.S. and India to strengthen existing RE technology and innovation initiatives while forming university and cross-country private-private investment platforms. The formation of these innovation channels might also encourage MSMEs to develop targeted energy businesses such as efficient cooling technologies.
Lastly, considering India’s high climate vulnerability, mitigation strategies need to be integrated with adaptation challenges. Integrating clean tech or “powering livelihoods” can reduce input costs for farmers that dependent on flaky grid electricity. And RE technologies also can address the infrastructure gap, building socio-economic and climate resilience in rural parts of the country. Bilateral platforms to foster historic multi-stakeholder partnerships between the U.S. Agency for International Development (USAID), state governments, and local Civil Society Organizations would act as integral pillars for India’s development goals.
The advent of renewable energy technologies and associated supply chains is drastically transforming the geopolitical landscape in both India and the US—and across the globe. Rather than perceiving these changes as barriers to stop momentum, they could be utilized to strengthen key partnerships and accelerate the transition toward achieving established Net Zero targets equitably.
Sources: ABC News; Business Standard; Center on Global Energy Policy; Climate Policy Initiative; Hoover Institution; India Briefing; International Trade Administration; Invest India; Ministry of New and Renewable Energy, India; Mint; National Science Foundation; Phenomenal World; SweetwaterNOW; UNFCCC’ USAID; US Chamber of Commerce; US Department of Energy; US State Department; US Treasury; Washington Post; The Wire; World Resources Institute; Your Story
Photo credit: cyclist passing nearby solar panels installed on Delhi Meerut expressway, that gives power to street light of this highway, courtesy of PradeepGaurs/Shuterstock.com.
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