Clean energy can cement Indo-US ties

When Indian Prime Minister Narendra Modi visits Washington, US President Donald Trump and he will find numerous areas of disagreement. High on that list will be climate change. Early this month, Trump put a stick in the eye of the world by announcing that he will pull the US out of the Paris Agreement a deal painstakingly negotiated by 195 countries in 2015 and widely seen as the best hope for a beginning to curtail the dangers of global climate change.

Trump’s complaints focus on his view that the agreement is unfair to the US and overly generous to other countries, including India. That view is wrong and one thing Modi’s team could do is show the Trump administration a better way to engage with the world. Indeed, Trump held open the option of “renegotiating” the Paris Agreement to avoid an exit. India would help the world by showing that the agreement is a lot more flexible and fair than Trump imagines.

The Paris Agreement marks a new era in global climate cooperation, with each country pledging its own contribution to climate-change mitigation. These commitments are non-binding, but will be revisited every five years with the intention of increasing the world’s ambition over time. This flexible structure enabled the near-universal acceptance of the agreement and sidestepped conflicts about developed versus developing country responsibility for climate-change mitigation efforts. Trump’s comments demonstrate a misunderstanding about the agreement’s flexibility and risk reopening issues that plagued earlier efforts to establish a global framework to address climate change.

Based on a carbon budget and cumulative emissions, one would think the US would prefer not to reopen any discussion on fairness. US cumulative coal power generation from 1990-2015 was an order of magnitude higher than that in India, for a population less than a quarter of India’s. The much larger impact of the US on the atmosphere is even more evident from cumulative emissions of carbon dioxide from all energy sources not just coal but also oil and gas, where the differential between the US and India is even greater.

Some observers think Modi should or will follow Trump’s lead and exit the agreement as well. Not only has the Indian leadership refuted this possibility, that view is misguided because nearly all the basic actions that India pledged primarily boosting electricity efficiency in both consumption and generation and shifting to renewable energy (RE) are already under way.

India believed in coal because it was available (“energy security”) and it was cheap. India also has a lot of sunshine, and solar power prices have decreased many multiples in just a few years. The newest bids for grid-scale solar power (Rs2.44/kWh) are well below bid prices for new coal power. Although these are levelized comparisons, and true system-level costs of solar may be higher, it’s only a matter of time before the real costs of solar are lower than coal, even in the absence of a carbon price. Batteries will only help this crossover, helping meet RE’s biggest challenge of intermittency. Battery prices are also falling dramatically, and the US has significant technological prowess.

This dynamic of growth in India is precisely what makes US-India energy collaborations mutually beneficial. US energy demand is generally flat, but total energy demand in India may grow about 7% annually. Indian targets for RE are so ambitious that they require 25% annual growth in RE through 2022. Even California’s ambitious RE target of 50% share by 2030 requires only about 5% annual RE growth. Improved performance and declining costs can drive RE, but tapping global technology and capital markets can accelerate the shift. This doesn’t mean a handout it’s a business transaction. India and the US already engage on smart grids, and India is keen to increase its utilization of natural gas, a flexible and cleaner fuel. India knows and the Trump team has emphasized that a reliable energy system is one that has a diversity of energy sources, including coal.

Coal is a hot button issue in the US. Trump has promised to bring back jobs in the sector, but no serious analyst thinks he can honour this pledge. Coal is a topic where India and the US can find common ground. In its mission to make coal more efficient and cleaner, India is implementing standards for sulphur emissions from coal power plants and is tightening standards for other pollutants linked to local air pollution, a major issue in India. Given limited Indian experience and manufacturer capabilities for the required retrofits, this is another opportunity for US technology providers, who pioneered solutions required by the Clean Air Act.

The friends of the US are becoming reticent with Trump in the White House. It is easy and tempting to heavily criticize the US stance on Paris, and surely the country deserves a rebuke. But the business of diplomacy and deal-making something that Modi and Trump both understand is seeing the problem through the other person’s eyes and finding room for compromise. Few American allies are doing that right now. India could.