By: Medha Prasanna
The United States and India are among the largest consumers of energy and emitters of greenhouse gases globally. Annually, the United States emits about 6 billion tons of Greenhouse Gas emissions (GHG’s) compared to India’s 4 billion (per capita emissions stand at 18 tons and 3 tons respectively). The two countries’ bilateral climate and energy cooperation will have important repercussions for the energy transition and global emissions. But in both countries, such cooperation hinges on politics. In the United States, in particular, climate and energy policy remains a partisan issue, with Democrats giving greater priority to clean and green energy production and emission reductions. The outcome of this November’s presidential election thus has implications for bilateral climate and energy cooperation with India, and by extension the global agenda.
To date, U.S.-India climate and energy cooperation has involved four aspects: technical assistance, climate finance, supply chain resilience, and fossil fuel trade. The results of this November’s U.S. presidential election is likely to have a significant effect on the nature of technical cooperation and climate financing between the United States and India. By contrast, supply chain diversification and fossil fuel trade are less likely to shift course due to continuing geoeconomics competition with China and the salience of global energy markets.
Technical assistance through the Strategic Clean Energy Partnership (SCEP previously branded as PACE and SEP under the Obama and Trump administrations respectively) consists of partnerships with central and state governments to provide inputs on scaling up clean energy technologies. The outputs include policy measures, sharing and demonstrations of assessment tools, setting up financing mechanisms, and capacity building. For instance, through SCEP, Indian agencies are engaged with U.S. national laboratories to conduct research and analysis on the modelling capacity of low carbon technologies. Overall trends indicate that these partnerships are better supported under democratic administrations and were stalled under the Trump administration.
Appreciable climate financing has been largely missing from the bilateral relationship through changes in leadership. There is cause for optimism with current incumbents going much further to deliver climate finance than ever before. However, these flows are currently nowhere near the $2.5 trillion (120 billion -140 billion per year) required to meet the 2030 energy transition goals in India. A bright spot in the current Biden administration’s climate finance efforts has been movement of capital under the U.S. Development Finance Corporation (DFC) in solar projects. These investments by the DFC of about $1 billion in 2024 will add 15 gigawatts of renewable energy capacity to the mix.
India is now the largest hub for DFC investments in general. Beyond the DFC, the U.S.-India e-buses initiative brought in a total of $390 million of which $150 million is from the U.S. government (inter-agency effort) and philanthropic groups to roll out 50,000 e-buses in 2027 and pave the way for electrification of India’s 1.5 million buses. Last year, the United States and India also set up a joint fund of $1 billion to shore in investment for renewable energy infrastructure. These efforts are beginning to bear fruit, but the status and scale of private financing shored in by these funds can only be determined after deployment in a few years’ time.
By contrast, cooperation on supply chain resilience appears more steady. India and the United States enjoy broad convergence on their structural competition with China in the Indo-Pacific. Their cooperation has extended to climate change and clean energy, a sector where China enjoys outsized industrial dominance and supply chain concentration. Consequently, changes in administration are unlikely to alter the push by both Washington and New Delhi to diversify clean energy supply chains from China.
Finally, trade in fossil fuels is likely to continue driven mostly by market forces. Despite ongoing efforts at energy diversification, India depends heavily on fossil fuel imports. U.S. oil and gas exports to India have increased from $4.1 billion in 2018 to nearly $13 billion in 2023 in large part due to policies put in place by the Obama administration. India’s petroleum product exports to the United States have also increased from 27 thousand barrels to 39.5 thousand barrels in the same time frame.
Observers in India should expect a drop in technical assistance and financing commitments from the federal U.S. government in the event of a Republican victory in November’s U.S. presidential elections but relative continuity under a Democratic administration. Yet, despite the importance of the central government, states in India have a degree of autonomy over the power sector as outlined by the Indian constitution. State level and private sector buy-in is imperative to further bilateral cooperation in energy and climate. Moreover, aspects of bilateral energy cooperation will continue regardless of changes in leadership given India’s rising energy demand and geopolitical considerations.
Medha Prasanna is a Junior Fellow and Program Assistant for the Energy & Climate program at ORF America.