Beyond Net-Zero: Redefining the U.S.-India Energy Partnership

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With elections both in the United States and India, the governments of both states are under tremendous pressure to reshore supply chains, ensure job security, and ensure a good quality of life for their citizens. They must deliver on this mandate while also ensuring societies aren’t destabilized by climate change. This is the opportune time to recast energy cooperation between the United States and India as a green industrialization partnership. This “whole-of-government” approach would leverage unique needs and strengths of relevant central government agencies, state governments, and the private sector.

The focus of this recalibrated partnership should be rapid infrastructure development, deep electrification, and creating climate-aligned budgets and investment plans.

Elements of a Climate-Aligned Industrial Partnership

1. Spend on big infrastructure (and build it fast): India has been on a building spree while the United States is beginning to embark on one with the combined capital of the Build America, Buy America Act and the Inflation Reduction Act.

This is an opportunity for U.S. states and stakeholders to learn from how India’s state-level institutions are deploying the latest technologies with federal infrastructure funding. For instance, Uttar Pradesh spent approximately $64 billion on infrastructure over the last five years while managing complex projects aimed at improving its roads, bridges, smart city upgrades, waterways, renewable energy power generation capacity, and two large national industrial rail corridor projects.

Between the two countries, there are great examples of new investments in electrified rail and the deployment of large-scale new grid infrastructure—especially for mechanical and chemical energy storage, port revitalization, and offshore wind. Both countries will need to make bigger bets and learn from each other on how to spend and build infrastructure at scale, fast.

2. Electrify everything: India’s extensive grid deployment gains provide an opportunity to reduce imported hydrocarbons to power transportation, heating, and cooking. Reducing dependence on imported hydrocarbons, especially in the context of rising global geopolitical uncertainties—as underlined by the past few years—will have the dual advantage of promoting climate goals as well as energy security.

Early lessons from the United States on demand stimulation for electrons for a newly electrified United States could be applied to assist India’s newly electrified areas in moving up an electrified energy ladder. For instance, India can learn from the experience of U.S. states like Minnesota, which meticulously documented how rural household electricity increased due to grid expansion and the resulting short and long-term impacts on rural economies. Simultaneously, India’s lessons in the deployment of modern grid infrastructure, specifically high voltage direct current (HVDC) transmission lines, could inform grid design, upgrade, and procurement policies in the United States. India has been able to plan for the integration of large-scale clean energy by advanced planning and deployment of HVDC transmission lines (currently 50 percent more than the United States), thus avoiding possible backlogs and the need for interconnection upgrades, the likes of which the United States is facing. 

The march toward electrifying everything will require experimentation. This area is ripe for continued joint research and development through the U.S.-India Collaborative for Smart Distribution System with Storage (UI-ASSIST) project. The project has developed tools and conducted pilots to manage an increasingly interactive and distributed energy system, deploying secure clean energy and storage solution models. Its continued funding by both countries could help it sustain focus on deep electrification. 

3. Aligning government departments to court new capital flows: Creating climate-aligned industrial ecosystems is crucial but requires complex coordination between various government departments to align the right incentives and policies. Greening the steel industry is recognized as an important test for how a new industrial revolution will be birthed—underpinned by allied emergent industries such as green hydrogen production and utilization. In India, states like Odisha, West Bengal, and Jharkhand could demonstrate how to modernize the steel sector to be fit for a climate-constrained world. How they align their state departments to design policies and budgets to harness central government support from initiatives like the National Green Hydrogen Mission will be a test for center-state cooperation for green industrialization.

Aligning state-level development policies with changes to revenue streams will require climate-aligned budgeting that informs investment strategies. These investment plans could additionally be used to tap funding from multilateral and private sector sources. State-level models where innovative integrated interdepartmental coordination is happening to facilitate this planning style should be studied closely and replicated. Jharkhand is demonstrating what interdepartmental planning for a new climate-aligned economic strategy could look like through its “Future Ready Jharkhand” process.

Years of evolving strategic energy cooperation between the United States and India has been instrumental in building trust and providing a “proof of concept” for how to navigate the energy transition together. With growing supply chain and job growth pressures in both countries, the time is now for both countries to sharpen their energy partnership to address these pressures. They can achieve this by designing climate-aligned industrial policies that facilitate large-scale infrastructure spending, expand electrification, and are supported by new capital mobilization strategies. 

Kartikeya Singh is a senior associate (non-resident) at the Chair in U.S.-India Policy Studies and Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.

Kartikeya Singh
Senior Associate (Non-resident), Energy Security and Climate Change Program and Chair in U.S.-India Policy Studies