Information about the country of India
India is in the eye of the energy transition storm. No other country must balance the challenges of implementing so many power sector reforms while expanding energy access to hundreds of millions of people. All of this is happening in a time of unrivaled innovations in energy technologies and rapidly changing business models and economics of energy production and delivery. The International Energy Agency’s (IEA) recently released India Energy Outlook reaffirms this, stating that India is “at the center of global energy demand moving forward.” With understandable pressure to bring bold targets to the table at this year’s UN climate change conference (COP26), India may join other Asian nations in announcing a net-zero carbon emissions target. Leveraging the IEA’s latest scenarios, partner nations need to be prepared to design bilateral energy partnerships that meaningfully meet India’s net-zero moment. For the United States, here are some steps to forge a new partnership.
U.S.-India energy cooperation has a long history and has seen cooperation on many fronts, including civil-nuclear cooperation, the fossil fuel sector, as well as a focus on renewable energy technologies and grid infrastructure. These efforts have served their purpose well, given the time in which they were operating. However, the changing landscape of energy economics and technological and business model innovation, along with the urgent imperative to act on climate, requires re-casting the pillars of cooperation with some new strategies that will benefit both parties in navigating the transition together.
- Activate a working group on critical minerals and supply chains. According to the IEA, $1 out of every $7 spent worldwide on solar, wind, and energy storage technologies will be spent in India by 2040. Given that India’s new energy security concerns will stem from powering its energy transition, a concern shared by partners making up the Quadrilateral Security Dialogue, activating the recently announced working group focused on developing and processing supplies and supply chains of critical rare earth minerals should proceed immediately. A starting point for discussions could be determining how the United States and allied partners can develop these supply chains, which are currently dominated by China. The dialogue will also require the participation of trade and commerce agencies to chart a pathway of least conflict that ensures equitable sharing of opportunities from the explosion of this new industry.
- Change the coal working group into a working group on the coal transition. There was a time to aid India in the buildup of its coal-powered energy generation assets. But that was when India did not have enough power to meet its demand; coal was the cheapest source of electricity for the country, with no viable alternatives on the horizon; and air pollution, water stress, and climate action concerns surrounding the coal value chain were not as acute. That time is long gone. According to the IEA, the future of thermal coal in India is set to decline to 30 percent of the electricity generation mix, from 70 percent, by 2040. Additional analysis from EMBER suggests that coal-fired generation may have peaked in 2018 and on-grid coal capacity could crest in the next five years both due to the Covid-19 electricity demand shock and India’s commitment to meeting its stated renewable energy and old thermal power plant phasedown targets.
As it is, the United States does not have a Ministry of Coal to match dialogue with India’s, and its own coal industry has seen rapid decline. While there is of course still a need to engage India’s coal sector in water and air pollution management, power plant flexibility, and efficiency of resource use, a stronger partnership would be one that aid’s India’s coal sector, and her coal-rich states, in making a transition. Such a dialogue could focus on:
- Developing coal transition readiness assessments; establishing an institutional mechanism that will drive an action plan, which should include structuring financial packages and strategies for coal-dependent communities such as securing pensions; establishing new skilling and training programs; and rebuilding communities in decline.
- Preparing business transition plans, informed by analysis such as that started by scholars at Imperial College, for state-owned enterprises such as Coal India Limited, which has already started to diversify its business into renewables, and Indian Railways, which is dependent on coal transport revenue but has itself declared a net-zero carbon emissions target.
- A new U.S.-India utility-to-utility partnership to jump-start the conversation and planning for gradual phaseout of coal for not only state-owned power generation and distribution utilities but also private players such as Tata Power, JSW Energy, and Adani. U.S. utilities devising such plans including Xcel Energy and NextEra could be key partners to involve.
- A regulator-to-regulator subnational dialogue on the matter to dovetail with the utility partnership to create a supportive policy regime that can help coal plants provide flexibility during the time of transition.
- Leaders from coal-value chain dependent states in both the United States and India should be part of the dialogue as they navigate the need to balance state budgets with shrinking revenues from the sector and the need to set up new institutions and regulations to manage the transition.
