Redefining the US-India Energy Partnership

With elections in both the United States and India, both state governments are under enormous pressure to reallocate supply chains, ensure job security and a good quality of life for their citizens. They must fulfill this mandate while ensuring that climate change does not destabilize societies. This is the right time to transform U.S.-India energy cooperation into a partnership for green industrialization. This whole-of-government approach would leverage the unique needs and strengths of relevant central government agencies, state governments, and the private sector.

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

Elements of a climate-adapted industrial partnership

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

This is an opportunity for states and U.S. stakeholders to learn lessons from how Indian state-level institutions are implementing the latest technologies through federal infrastructure funding. For example, the state of Uttar Pradesh has spent about $64 billion on infrastructure over the past five years, managing complex projects to improve roads, bridges, smart city upgrades, waterways, renewable energy capacity, and two major national industrial rail corridor projects .

In both countries, there are great examples of new investments in electrified railways and the large-scale deployment of new grid infrastructure – especially for mechanical and chemical energy storage, port regeneration and offshore wind energy. Both countries will need to invest more and learn from each other how to spend money quickly and build infrastructure on a large scale.

2. Electrify everything: Widespread benefits in implementing the grid in India provide an opportunity to reduce imported hydrocarbons for transportation, heating and cooking purposes. Reducing dependence on imported hydrocarbons, especially in the context of growing global geopolitical uncertainty – as highlighted in recent years – will have a double advantage: promoting climate goals and energy security.

Early lessons learned from the United States on stimulating electron demand for the newly electrified United States can be applied to help newly electrified areas of India climb the electrified energy ladder. For example, India can learn from the experience of US states such as Minnesota, which have painstakingly documented increases in rural household electricity consumption as a result of grid expansion and the resulting short- and long-term impacts on rural economies. At the same time, India’s lessons learned in deploying modern grid infrastructure, particularly high-voltage direct current (HVDC) transmission lines, can inform U.S. design, modernization, and procurement policy. India has managed to engineer large-scale clean energy integration through advanced planning and deployment of HVDC transmission lines (currently 50 percent more than in the United States), thus avoiding possible backlogs and interconnection modernization needs such as those faced by the United States.

The march towards electrifying everything will require experimentation. This area is ripe for further joint research and development under the U.S.-India Collaborative for Intelligent Distribution and Warehousing System (UI-ASSIST) project. The project developed tools and conducted pilots to manage an increasingly interactive and distributed energy system, implementing models for safe clean energy and storage solutions. Continued funding by both countries could help maintain the focus on deep electrification.

3. Adapting government departments to handle new capital flows: Creating climate-adapted industrial ecosystems is crucial, but requires complex coordination between different government departments to align appropriate incentives and policies. The greening of the steel industry is seen as an important test of how a new industrial revolution will emerge – one that will be underpinned by related emerging industries such as the production and use of green hydrogen. In India, states such as Odisha, West Bengal and Jharkhand could demonstrate how to modernize the steel sector to adapt to a climate-constrained world. How they align their state departments to design policies and budgets to leverage central government support from initiatives such as the National Green Hydrogen Mission will be a test of central state cooperation for green industrialization.

Adapting state-level development policies to changes in revenue streams will require climate-adapted budgeting to underpin investment strategies. These investment plans can be further leveraged to leverage financing from multilateral sources and the private sector. Models at the state level where innovative integrated interagency coordination takes place to facilitate this style of planning need to be carefully explored and replicated. Jharkhand is demonstrating what cross-ministerial planning for a new climate-adapted economic strategy could look like as part of the Future Ready Jharkhand process.

Years of growing strategic energy cooperation between the United States and India have played a key role in building trust and providing a “proof of concept” for achieving the energy transition together. With supply chain pressures mounting and job growth in both countries, it is time for both countries to strengthen their energy partnership to address these pressures. They can achieve this by developing climate-adapted 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) in the Department of US-India Policy Studies and the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, DC