Energy cooperation key to Indo-US ties

The sudden increase in the warmth of the relationship between India and the US should, one hopes, result in a reduced threat of planetary warming associated with climate change! Although it is highly unlikely that the forthcoming visit of US President Barack Obama to India will result in a climate commitment of the kind made during his visit to China recently, there are many opportunities for agreements that can be made on energy cooperation between the two countries that would not only have significant benefits, in the form of climate implications, but also will address the issue of jobs, a central concern in both countries.

Let us start by looking at the key challenges that India is facing in the energy sector and how these can be converted into opportunities. Today, India has a huge demand-supply gap in the availability of energy which is resulting in (1) recourse to expensive diesel-based back-up generator systems and, (2) an increasing reliance on import of fuels-not just oil and gas, but also coal. India's energy security strategy, therefore, would urgently call for enhancing investments in energy production and generation and in maximising the use of domestically available energy resources. However, investments in the energy sector dried up in the last few years due to a number of challenges, including issues around accessing India's remaining coal resources-which are in physically difficult geographies-and inadequate recognition of vulnerabilities faced by project developers relying on imported energy forms. While Prime Minister Narendra Modi has made clear his intent of removing bottlenecks in the flow of investments in the conventional energy sector, he has also enthusiastically endorsed an expansion of the role of renewable energy in India's energy economy. At the same time, his recent international tours have revealed that he is also putting in enormous efforts in advancing the opportunities provided through the civil nuclear cooperation agreement that was signed between India and the US. It is ironical that while India's nuclear programme impetus was provided through this agreement, the benefits are, thus far, being reaped by countries other than the US.

The US engagement with India on nuclear and renewable energy-both climate-friendly energy options-has been constrained by two key issues: the nuclear liability law and the domestic content requirement/Make-in-India goals of the government of India. Concerted engagement on the solutions already being considered under the nuclear liability provisions could help provide a way forward for engaging US technology providers. On renewable energy, US government officials need to be much more receptive to India's ambition revealed in the Make-in-India campaign and evaluate the opportunities that still exist for substantial engagement by US industry.

Several media reports in the last few days reflected the concerns of US officials-"Given where India is today, and the pace it wishes to develop, it should not focus on making in India, but on taking technology where it gets it," The Hindu quotes a senior US official. Here it would be interesting to note that one of the stated goals of India's Jawaharlal Nehru National Solar Mission is "to create favourable conditions for solar manufacturing capability .... for indigenous production and market leadership." A clear distinction needs to be made on accessing technology and on manufacturing. India could still access technologies from the best available sources and pay for the intellectual property associated with it, but establishing manufacturing capacities to produce ready-to-use products in India is of vital importance for inclusive growth. While the creation of jobs is a necessity in both countries, India has a much higher need. Moreover, while India is focusing on manufacturing of solar cells and modules, that still leaves a sizeable upstream value-chain; for instance, manufacturing equipment that would be required to set up such state-of-the-art production plants could potentially be sourced from technologically advanced countries such as the US. Besides, there are opportunities related to facilities that would be necessitated for quality assurance, testing and customisation, etc. Therefore, from a longer-term perspective, partnering

India in the Make-in-India vision could prove to be a win-win opportunity for both the countries.

Moving forward on a much more aggressive and targeted cooperation on both these fields would be a much larger contribution to the climate change solution that we can together make than arriving at a consensus of the type reflected in the US-China accord. If India achieves its ambitious target of 100 GW of solar energy and triples its nuclear capacity by 2022, it would be well set on a low-carbon energy pathway. Beyond that, it would address India's energy security concerns, lower pollution levels and contribute to various sustainable development goals. Obama and his team should take a longer-term, value-chain-based view of the opportunities that an accelerated, aggressive clean energy cooperation agenda provides not just for the two countries but for the world as a whole! What emerges from the meetings between these two leaders would find immediate traction in the discussions next week at the Delhi Sustainable Development Summit (DSDS) with its focus on "Sustainable Development Goals and Dealing with Climate Change" -a gathering of leading opinion makers on sustainability issues from across the world.