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The United States is strategically positioned to become a global leader in low-carbon technologies by facilitating their deployment in emerging markets. This brief draws insights from three case studies, each pairing a technology (carbon capture, long-duration energy storage, and hydrogen) with a partner country (Indonesia, India, and Brazil, respectively), and identifies four key deployment enablers: capacity building, conducive regulatory environments, demand creation, and innovative finance structures. Building on these findings, it proposes the creation of an “American New Energies for the World” (ANEW) Partnership to match U.S. low-carbon technology providers with emerging markets, leveraging de-risked supply chains, competitive products, and joint development of conducive business environments. Complementing this, the “Low-Carbon Loci” (LOCAL) Deployment initiative would demonstrate U.S. technologies domestically to foster bilateral knowledge-sharing, workforce development, and regulatory alignment in partner countries. These efforts, underpinned by a coherent U.S. blended finance strategy, would strengthen global energy security, drive innovation, and position the United States as a leader in low-carbon solutions while enabling emerging economies to achieve decarbonization and economic progress.
Over the past two decades, the United States has led the world in reducing greenhouse gas emissions as markets have shifted toward lower-carbon power generation and innovation has reduced the cost of new technologies. This progress is reflected in the 21 percent decline in net emissions in the United States from 2005 to 2020. Concurrently, the costs of renewable energy have fallen drastically. The average global cost of onshore wind projects decreased by 70 percent and offshore wind projects decreased by 63 percent between 2010 and 2023. During the same period, global solar photovoltaic (PV) project costs fell by an impressive 90 percent and battery storage project costs dropped by 89 percent, making renewable energy systems more cost effective. Alongside falling costs, the availability of renewable technologies has expanded rapidly. The power generation capacity of renewables has increased more than fivefold globally since 2000. However, despite these advancements, an estimated 1.18 billion people still live in energy poverty and lack access to electricity.
. . . becoming an exporter of innovative technologies and services is an economic and geopolitical opportunity for the United States.
Continued innovation will be necessary to achieve global improvements in energy access, affordability, security, and emissions. Countries adopt new energy technologies when they are well priced, improve security, and lessen impact on the environment. Identifying and developing areas of comparative advantage for U.S.-based low-carbon technologies and removing technical barriers to their adoption abroad will be key components in driving global emissions reductions with U.S. innovations. Additionally, becoming an exporter of innovative technologies and services is an economic and geopolitical opportunity for the United States. In the case of liquefied natural gas (LNG), the United States already sees significant economic benefits from the export of energy products while simultaneously bolstering the energy security profiles of its allies. In terms of nuclear energy, the United States has 94 reactors in 28 states and plans to expand with thirteen more proposed nuclear units nationally.
This brief examines three opportunities for U.S. innovations to be deployed in three different countries important for U.S. international strategy, future energy systems, and global emissions. Low-carbon technologies were paired with a selected country based on two guiding criteria: (1) the potential for U.S. engagement to deliver substantial emissions reductions and (2) the ability of the selected country to set and implement regional and international standards on the respective technology’s deployment. Each case study will explore the following questions: What technical, commercial, legal, permitting, and regulatory barriers exist within the selected country for the respective low-carbon technology? What can be done to harmonize initiatives across the leading U.S. agencies and programs to advance U.S. low-carbon exports.
Informed by a series of workshops with in-country experts, officials, and U.S. government experts, this brief highlights how U.S. strategies can be built to identify, develop, and capitalize on comparative advantages for U.S.-based innovations deployed abroad. These opportunities can be enabled by the U.S. government through diplomatic efforts, trade rules, financing provisions, technical or security assistance, and other efforts.
Indonesia has experienced significant economic growth over the past fifty years, riding on the back of its agricultural, mining, manufacturing, and, perhaps most consequentially, hydrocarbon activities. However, this economic success story has led to a corresponding growth in emissions. Fossil fuels accounted for over 80 percent of Indonesia’s power generation in 2022, with 60 percent of the total mix coming from coal alone. Having informally pledged to achieve net-zero emissions by 2060, the country increasingly looks to CCUS as an essential technology to meet its climate targets. The low-carbon technology also carries with it immense potential for economic development, with the estimated carbon market size derived exclusively from CCUS implementation amounting to as much as $3.2 billion annually. In a bid to capture this opportunity, the Indonesian government launched the Indonesia Carbon Capture and Storage Center (ICCSC) in 2023, releasing the first regulatory framework for CCUS in Southeast Asia the following year.
The country’s CCUS ambitions center around the implementation of 15 projects by 2030, as well as the development of nearly 600 gigatons of CO2 storage capacity in saline aquifers and depleted reservoirs. Developing this storage capacity would meet Indonesia’s carbon storage needs for nearly 500 years, while far exceeding the required 7.6 gigatons per year called for in the International Energy Agency’s Net Zero Emissions Scenario by 2050. The favorable geological conditions for storage, ample utilization pathways through industrial applications and enhanced oil and gas recovery, extensive local expertise in target sectors, a strategic location within the Indo-Pacific, and ongoing investment announcements from major global energy companies position Indonesia as a prospective regional and global leader in CCUS activities.
Developing [Indonesia’s CCUS] storage capacity would . . . [exceed] the required 7.6 gigatons per year called for in the International Energy Agency’s Net Zero Emissions Scenario by 2050.
To maintain the momentum, the Indonesian government will have to tackle a series of barriers ranging from addressing the technical challenge of capturing, transporting, and sequestering carbon to securing financing for these highly capital-intensive projects and building public trust in the technology
The United States is the current world leader in carbon management, with over 20 million tons per annum (mtpa) of capture capacity. However, achieving its climate ambition of net zero by 2050 will require between 400–1,800 mtpa of CO2 captured per year by 2050, inclusive of negative emissions and point-source capture schemes. To that end, the United States actively supports the development of CCUS through numerous policies and public investment programs. The Bipartisan Budget Act of 2018 and the Inflation Reduction Act (IRA) of 2022 both provided stepwise enhancements to the 45Q tax credit, while the Bipartisan Infrastructure Law provided over $12 billion in funding to support the commercial deployment of carbon management solutions. These policy incentives, along with favorable geology and world-class talent, make the United States an attractive environment for scaling up CCUS technologies.
45Q Tax Credit for Carbon Oxide Sequestration
Internal Revenue Code section 45Q grants a tax credit for the capture of qualified carbon oxides (e.g., carbon dioxide and carbon monoxide) and their eventual utilization or sequestration. The potential credit value differs between point-source capture (e.g., from power plants and industrial sources) and direct-air capture (DAC) methods. The final awarded value is determined by whether the captured carbon oxide was sequestered in permanent geological storage, stored through enhanced oil recovery (EOR), or employed for other utilization pathways, such as for producing synthetic fuels. The credit can be claimed for a 12-year period by projects that began construction before the end of 2032.
Originally introduced in 2008 to incentivize point-source carbon dioxide capture, the 45Q tax credit was updated in 2018 to include DAC technologies and other carbon oxides, such as carbon monoxide. Despite the update, the credit remained insufficient to justify investment in the costly, capital-intensive technology. The passage of the IRA in 2022 transformed this long-standing provision into the most generous CCUS incentive in the world, turning carbon management solutions into an attractive tool to clean up broad swathes of the U.S. economy.
The United States’ and Indonesia’s long-standing diplomatic ties reached a historic new phase in November of 2023, when the two democracies elevated their existing relationship to a Comprehensive Strategic Partnership while making the clean energy transition and CCUS development highlights of the announcement.
Other U.S. government initiatives include the Department of Energy’s Net Zero World Initiative, which recognizes CCUS technologies as integral to a net-zero future and for which Indonesia is an inaugural member, and the Department of Commerce’s bilateral work plan with the ICCSC, which aims to develop Indonesia’s CCUS regulatory framework. From a regional standpoint, the United States seeks to accelerate a clean energy transition in partner Asian economies through Clean EDGE Asia, having published a CCUS Handbook for Policymakers in support of this initiative in April 2024.
Indonesia’s CCUS opportunity, while actively supported by the U.S. government and the private sector, remains in its early stages. With the goal of better understanding the development context and barriers to deploying CCUS technologies in the Southeast Asian country, the CSIS Energy Security and Climate Change (ESCC) program gathered experts from the public, private, and civil society spheres from both the United States and Indonesia.
To guide focused conversation, the workshop was framed around the following questions:
Key trends and takeaways that emerged during the workshop include:
India aims to have non-fossil energy sources make up 50 percent of its total installed capacity and reduce the emission intensity of its GDP by 45 percent by 2030. Achieving this ambitious goal will require a range of technical solutions and policy measures to rapidly increase the penetration of renewable energy. At the same time, integrating a large share of variable and intermittent renewable energy into the grid poses challenges for maintaining grid stability and ensuring secure power supply.
Long-duration energy storage (LDES)—defined as systems able to provide electricity for 10 or more hours—could help reduce the variability of renewable generation and improve grid reliability by enabling load shifting and providing ancillary services. In a fast-evolving technological and market landscape, clear priorities and action plans are critical for leveraging energy storage to accelerate renewable energy deployment in India.
India’s Central Electricity Authority (CEA) estimates that storage capacity will need to reach 16.13 GW by 2027 and 73.93 GW by 2032 to meet grid demands.
Thermal, chemical, mechanical, and electrochemical LDES solutions exist and exhibit a range of technical readiness. The primary source of existing LDES capacity in India is pumped hydro (PSH), which totaled 3.3 gigawatts (GW) as of March 2024. An additional 78.1 GW of PSH projects, compared to 1 GW of standalone battery energy storage systems (BESS), are in the development pipeline. With $452 million in government funding to support an additional 4 GW of battery storage by 2031, India’s Central Electricity Authority (CEA) estimates that storage capacity will need to reach 16.13 GW by 2027 and 73.93 GW by 2032 to meet grid demands.
Nevertheless, India’s nascent LDES sector is still facing a wide range of uncertainties surrounding considerations such as technological maturity, regulatory structure, market design, and capital allocation.
With public and private investment in energy storage technologies surpassing $43 billion since the passage of the IRA in 2022, LDES is emerging as a key growth sector in the United States. According to the Department of Energy (DOE), $330 billion in cumulative capital is needed for 225–460 GW of LDES capacity for the U.S. power grid in a net-zero-by-2050 scenario.
Existing policy initiatives are expected to help facilitate LDES development by mitigating technical and commercialization challenges. The IRA and the Infrastructure Investment and Jobs Act (IIJA) alone are projected to facilitate an additional 30 percent increase in LDES deployments and a 15 percent cost decline in the United States by 2030. The U.S. domestic LDES market is expected to reach $130 billion by 2030, while cumulative exports could reach $8.4 billion annually.
Aside from the storage-specific ITC in Section 13102, existing production tax credits (Section 45) for select renewable energy sources were extended through the end of 2024. Starting in 2025, they will be phased out and replaced by the new tech-neutral PTC (45Y) and ITC (48E); LDES facilities can choose to receive one of these credits. In addition, sections 13501 (48C) and 13502 (45X) will support the development of the LDES value chain and ecosystem.
LDES has been an area of focus for U.S.-India collaboration. The U.S.-India Energy Storage Task Force, which launched in 2024 under the U.S.-India Strategic Clean Energy Partnership, engages government officials, industry representatives, R&D organizations, and other stakeholders to scale up energy storage technologies. Senior leaders at the U.S. DOE and the India Ministry of Power jointly chair the task force, which facilitates information sharing on existing and planned energy storage projects, business models and financing structures, and the state of energy storage technologies. In September 2024, the United States and India launched a global clean energy supply chain partnership that pledged to unlock $1 billion in new multilateral financing for the manufacturing of key technologies, including energy storage.
Aside from LDES-focused efforts, public, private, and nongovernmental stakeholders in the United States and India have a prolific history collaborating on renewable energy production and development through conduits including the US-India Clean Energy Finance (USICEF) initiative, the US-India Partnership to Advance Clean Energy (PACE), the U.S.-India Energy Dialogue, and many others.
The CSIS ESCC program hosted a workshop gathering public, private, and civil society experts to better understand how the United States can more effectively engage with India in the development and trade of LDES technologies. To guide the conversation, the workshop was framed around the following questions:
Key themes and takeaways that emerged during the workshop include:
Elected as the host country for the upcoming Conference of the Parties (COP) in 2025, Brazil is in the climate spotlight. Home to a wealth of renewable resources, the country is committed to achieving its updated pledge of 59–67 percent emissions reductions by 2035 and reaching climate neutrality by 2050. Realizing these aspirations, however, will require addressing emissions from “hard-to-abate” sectors of the economy, such as heavy industry and heavy transport. Hydrogen, an energy carrier that can be produced through low-emission methods and which releases no carbon emissions when consumed, has emerged as a key tool to decarbonize these sectors. But emissions reductions and enhanced energy security are not the only benefits Brazil stands to gain from investing in clean hydrogen. The country is strategically positioned to leverage the $1.4 trillion global market opportunity presented by the clean molecule to establish itself as a leader in the energy transition through exports of hydrogen derivatives.
[Brazil’s hydrogen plan] envisions the development of low-carbon hydrogen pilot plants . . . and the establishment of low-carbon hydrogen hubs [to foster its] technical potential of 1.8 million metric tons of low-carbon hydrogen production per year.
To capitalize on that promise, Brazil’s Ministry of Mines and Energy published its updated three-year action plan for its National Hydrogen program in 2024, cementing the country’s commitment to hydrogen as a decarbonization pathway and driver of economic growth. The plan envisions the development of low-carbon hydrogen pilot plants by 2025 and the establishment of low-carbon hydrogen hubs by 2035. It also estimates a technical potential of 1.8 million metric tons of low-carbon hydrogen production per year, which would come from fossil, biomass, and renewable sources. Most recently, legislators approved up to BRL 18.3 billion (about USD $3.4 billion) in tax credits for clean hydrogen producers as part of the Low-Carbon Hydrogen Development Program. The Climate Investment Funds (CIF) also announced up to $1 billion in potential funding for clean hydrogen industrial hubs, with the Brazilian government launching an interest call for projects to be considered for the funding. Anchored by domestic demand and lofty European targets for imports of renewable hydrogen and its derivatives, the Brazilian hydrogen industry is poised for explosive growth.
However, a series of challenges remain in the way of materializing these ambitions. Due to transmission bottlenecks, Brazil’s national grid operator has recently capped how much power wind and solar power plants could deliver to the grid, effectively stunting investment in new renewable facilities. There’s also the question as to whether Brazil, with its highly permissible definition of what constitutes low-carbon hydrogen, will have trouble accessing export markets with more stringent emissions limits. Lastly, the scarcity of enabling infrastructure such as hydrogen pipelines and desalination plants, along with the lengthy permitting lead times for such projects, are barriers to the sector’s unimpeded growth.
Meanwhile, the United States has laid out an ambitious vision for its clean hydrogen sector. Multiple laws have introduced generous provisions to support the National Clean Hydrogen Strategy and Roadmap’s production targets of 10 million metric tons by 2050. Foremost among these are the Regional Clean Hydrogen Hubs (H2Hubs) program under the IIJA—$8 billion dedicated toward accelerating the development of domestic clean hydrogen via value chain regionalization—and the Clean Hydrogen Production Tax Credit under the IRA—which awards as much as $3 per kilogram of hydrogen based on lifecycle emissions. However, stalled regulations and the subsequent slowdown of project timelines have put a damper on deployment. Expanding markets for U.S. hydrogen technologies present an opportunity to continue unlocking long-awaited cost reductions, which would prove mutually beneficial for the United States and its prospective partners.
45V Tax Credit for Production of Clean Hydrogen
Section 45V, introduced by the IRA, grants a tax credit per kilogram of hydrogen produced based on a project’s lifecycle greenhouse gas emissions. The credit is technology agnostic since it focuses on the emission intensity of hydrogen production rather than on incentivizing specific production pathways. It can be claimed by projects that began construction before the end of 2032 for a 10-year period following the facility’s in-service date.
Highly contentious, the 45V tax credit guidance has seen debates surrounding procurement rules for qualifying clean electricity, the opportunity to rely on differentiated natural gas as a lower-emissions feedstock, and the use of renewable natural gas to offset a project’s emissions, among other arcane emissions accounting methodologies. How such rules are defined will inevitably steer the economic and climate outcomes of the U.S. clean hydrogen sector.
The United States and Brazil have an ongoing history of bilateral energy cooperation. They created the U.S.-Brazil Energy Forum (USBEF) in 2019, co-chaired by the U.S. secretary of energy and Brazil’s minister of mines and energy, as a platform to promote trade, investment, climate ambition, and interagency coordination. Under the USBEF, both governments launched the Clean Energy Industry Dialogue (CEID) in 2022 as a forum to foster public-private partnerships on clean energy initiatives. The most recent partnership announcement focused on strengthening bilateral cooperation on clean industrial development, with clean hydrogen and its derivatives playing a central role.
With the nascent clean hydrogen sector facing similar hurdles in both countries, the United States and Brazil stand to benefit from a collaborative effort. To better understand how the United States can effectively engage with Brazil in the development and trade of clean hydrogen technologies, the CSIS ESCC program gathered experts from the public, private, and civil society spheres in both countries.
To guide focused conversation, the workshop was framed around the following questions:
Key trends and takeaways that emerged during the workshop include:
This brief delved into how U.S.-developed innovative technologies could support the climate goals and the associated decarbonization needs of select countries. The ensuing workshops yielded country-specific takeaways that touched on the challenges and opportunities facing the deployment of such technologies. Common trends, however, can be found across all three case studies. These are synthesized below as a broad set of considerations for policymakers, financial institutions, and private sector players looking to engage these markets. Addressing these points will prove vital to clearing the way for the accelerated deployment of U.S. low-carbon technologies, thus mobilizing trade that advances decarbonization and economic development co-priorities in emerging economies.
These broad-reaching considerations will require coordinated action between the public and private sectors. Below, the authors outline a policy proposal to narrow the gap between the problem statements laid out in this brief and action on the ground.
The ANEW framework, to be jointly overseen by the U.S. Trade Representative (USTR) and the proposed National Energy Council, represents a whole-of-government approach to catalyze U.S. low-carbon leadership on the global stage. The framework would comprise three interconnected components:
1. Founding of the ANEW Partnership, matching U.S. low-carbon technology and service providers to emerging markets in partner countries.
As emerging economies and partner countries seek to decarbonize their economies, they will require access to cost-effective clean alternatives to current emission-intensive ways of doing business. However, these countries may be reluctant to adopt low-carbon technologies reliant on supply chains with high exposure to economic or geopolitical volatility risks, which could undermine their economic and national security objectives. Inspired by recent DFC and Indo-Pacific Economic Framework for Prosperity (IPEF) successes in integrating supply chains and accelerating low-carbon investments in allied countries, the ANEW Partnership would seek to create a coalition of U.S.-based private sector firms that:
The U.S. Department of Commerce’s International Trade Administration (ITA) and the U.S. Trade and Development Agency (USTDA) would lead the creation and implementation of the partnership. The partnership will act as a platform to match participating private sector members and their low-carbon products—independently or as a package—to participating emerging economies aspiring to reap positive economic and decarbonization outcomes through their deployment. With support from the United States, these partner countries will in turn commit to providing demand-pull measures and a regulatory regime that promotes a conducive business environment for candidate technologies.
[The ANEW Partnership seeks] to enable the joint supply chain verticality of low-carbon technologies between the United States and partner countries . . . fundamentally bolstering the energy, economic, and national security outlooks of its members.
The initiative seeks to capitalize on the immense tailwinds created by the IIJA and IRA, both of which are actively reshoring manufacturing and driving innovation of U.S.-based low-carbon technologies. Ultimately, the goal of this initiative is to enable the joint supply chain verticality of such technologies between the United States and partner countries, begetting transparency, traceability, and certainty of supply, thereby fundamentally bolstering the energy, economic, and national security outlooks of its members.
2. Enabling the ANEW Partnership through a U.S.-led blended finance engagement strategy that facilitates the uptake of strategic low-carbon technologies, solutions, and services in partner emerging economies.
U.S.-led blended finance structures can help de-risk investments and create favorable market conditions that facilitate public and private capital involvement and propel the development, commercialization, and deployment of these strategic low-carbon products, both in the United States and in partner countries. Grants, thematic bonds, equity investments, preferential loans, revenue or offtake guarantees, hedging contracts, insurance, securitization, derivatives, and many other concessional finance instruments can all be useful, depending on product- and country-specific needs. The United States already possesses the capacity to provide most of these instruments through various agencies, albeit in a piecemeal and disjointed manner.
Going forward, the U.S. government needs a coherent approach that guides the optimization of existing institutions and the creation of novel arrangements where necessary. The design and execution of this blended finance strategy should focus on the development of viable supply and value chains in the United States and partner countries. To identify high-potential areas or models of engagement, relevant stakeholders, including U.S. and partner government agencies, multilateral developmental finance institutions, product and service providers, private capital allocators, and civil society actors, should all be involved in a proactive coordinating effort.
A blended finance engagement taskforce, potentially overseen by the proposed National Energy Council, can lead the formation and implementation of this whole-of-government strategy. The taskforce can harmonize, improve, and leverage existing U.S. governmental entities, capacities, and channels— for example, the DFC, EXIM (China and Transformational Exports Program), Millennium Challenge Corporation, USAID (Scaling Up Renewable Energy Program), USTDA (Global Procurement Initiative), and relevant conduits of the departments of Commerce (ITA), State (Blue Dot Network Initiative), and Treasury (Exchange Stabilization Fund). If necessary, the task force can also spearhead the creation of new governmental capabilities.
3. Developing a “Low-Carbon Loci” (LOCAL) deployment initiative, enabling capacity building and knowledge sharing by matching U.S. commercial demonstration projects to ANEW partner countries.
To build trust and generate interest in ANEW’s low-carbon technologies and solutions, private sector partners will first have to demonstrate that their technologies are ready to be deployed on a commercial scale in the U.S. context. The LOCAL Deployment Program will seek to both recruit operating projects and deploy new commercial-scale projects from ANEW private sector members with the goal of matching them to cities and regions in partner emerging economies aspiring to deploy similar projects in their own contexts.
The program aims to enable bilateral knowledge sharing and workforce development through real-time project development and/or operation, training the would-be developers and operators of overseas facilities hosting U.S. low-carbon innovation. This initiative would be led by the U.S. DOE, jointly managed by the Office of International Affairs and the Office of Clean Energy Demonstrations. The latter, alongside the Loans Program Office, will provide financial and technical support to LOCAL projects, under the condition that these meet ANEW’s guiding principles for private sector members outlined above. The Department of Commerce would be involved in the initiative by recontextualizing the program’s lessons to help implement ANEW’s requisite demand-pull measures and regulatory harmonization in partner countries. These efforts would provide regulatory familiarity and offtake risk mitigation, thus helping create a more conducive business environment in emerging markets, boost investor confidence, and mobilize private capital for ANEW projects abroad.
The LOCAL Deployment Initiative would not only set the stage for the United States to become a global leader in emerging low-carbon technologies; it also has the potential to define the rules of the game by setting the standards that would govern the deployment of low-carbon solutions in emerging markets.
Please consult the PDF for the appendix.
Mathias Zacarias is an associate fellow and energy transitions fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Ray Cai is an associate fellow in the Energy Security and Climate Change Program at CSIS. Joseph Majkut is director of the Energy Security and Climate Change Program at CSIS.
This brief is made possible by support from the ClearPath Foundation.
