India’s place in the EU’s quest for renewable energy

Dr Yatharth Kachiar and Aditya Chauhan

The war in Ukraine has brought a painful epiphany for Europe that it needs to reduce its long-overdue dependence on Russian energy. The EU meets 40 % of its natural gas requirements from Russia, also the biggest oil supplier to the bloc. However, the dependence on Russian energy is uneven throughout the bloc since few countries are more dependent on Russian energy than others. For example, Germany imports 25% of its oil and 40% of its gas from Russia. Similarly, according to International Energy Agency estimates, Slovakia and Hungary imported 96% and 58% of their oil from Russia last year. In May 2022, Russian energy giant Gazprom stopped gas exports to Poland and Bulgaria when these countries refused the Russian demand for payment in roubles. If Moscow follows the same course with other gas-dependent economic powerhouses in the EU, such as Germany, the result could be catastrophic for the bloc as a whole. The Ukraine war has infused an urgency in the EU to diversify its energy resources rapidly. Therefore, the EU countries are debating the best possible way to lower their reliance on Russian energy supplies.

In the long-term, one of the best ways forward for the EU from a climate change and hard security perspective is a rapid transition to renewable energy. For the EU, a shift to renewable energy is a strategic investment in security. And this is where it can leverage its strategic partnership with India. With an ambitious target of reducing the carbon intensity of India’s economy by 45% by 2030 and achieving Carbon neutrality by 2070, New Delhi is looking to create synergy in green growth and green technology with like-minded entities. Green energy partnership became the major theme during PM Modi’s recently concluded three-day visit to European countries. In Denmark, he stated that “the mindset of use and throw is negative for the planet. It is necessary to get out of the consumption-oriented approach and the need of the hour is to promote ‘LIFE’ — Lifestyle for Environment.“

Progress so far

Collaboration on clean energy initiatives has been the bedrock of India-EU relations. A major push in exploring alternatives to traditional fossil fuels-based energy came with the joint Declaration of Clean Energy and Climate Partnership (CECP) in 2016. The main objective was to facilitate deeper cooperation to achieve more affordable clean energy and ensure that both parties achieve Nationally determined contributions (NDCs) in due time. The EU has undertaken many projects in various states of India under this partnership. The nature of cooperation ranges from financial support to technical assistance and knowledge sharing. For instance, France is financing SIMPA, an Indian startup that gives the people of Uttar Pradesh access to power by offering a prepaid solar energy service while Riso National Laboratory of Denmark offers technical assistance in setting up a Wind Turbine Test Station (WTTS) in Tamil Nadu. The India-EU panel meeting in December 2021 will further cooperation, especially in areas of Solar energy and financing of clean energy projects. International Solar Alliance (ISA), jointly set up by India and France, is a major step toward harnessing solar energy for national and global consumption. France also pledged one million euros to the ISA last year.

 Possible areas of synergy

Solar

India and the EU’s cooperation in clean energy have deepened over the years, but still, there is room for further collaboration. Largest EU solar markets like Germany, Spain and the Netherlands have led the way for other member states to invest in solar energy increasingly. According to Bloomberg NEF estimates, solar energy can provide around 20% of the total EU electricity demands by 2040, almost four times than current-day figures. India has also invested heavily in solar energy. Bhadla Solar Park in Rajasthan is the world’s biggest solar park spanning over 14,000 acres with an operational capacity of over 2 GW.

India is undoubtedly one of the global leaders in solar energy production. However, a lack of financial resources has slowed down its ambitious projects. The EU and its member states can assist India with financial resources and can make use of the country’s long experience with solar projects. According to an analysis by German newspaper Handelsblatt, European energy companies can spend up to one trillion euros on wind and solar energy by 2030. By investing a significant amount in countries like India, which are taking the lead in solar energy, European companies and the private sector can also play an active role in energy transition like EU institutions and member states.

Green Hydrogen

Another possible area of collaboration between India and the EU is Green Hydrogen. In 2021, the Indian government announced a National Green Hydrogen policy with the aim of producing 5 million tonnes of fuel annually by 2030. Under this policy, the government provides tax breaks and allots lands to set up plants. In 2020, the European Commission also adopted a dedicated green hydrogen strategy to create a green hydrogen ecosystem in the EU. At present, the Green Hydrogen industry in India is still in its early stages and will need more vital collaboration with the private sector and third-country partners like the EU.

This sector received much-needed impetus during PM Modi’s recent visit to Europe. Both Denmark and France have shown considerable interest in developing a partnership with India in Green Hydrogen. In France particularly, PM Modi invited French investment to transform India into a Green Hydrogen hub. Under the Clean Energy Partnership, India and the EU have already decided to host India-EU Hydrogen Forum, focusing on exchanging best practices and policies on the role of hydrogen in energy systems. The forum will also discuss the current status of clean hydrogen production and application technologies and share information on existing and upcoming hydrogen projects in the EU and India. Perhaps, another initiative which India can explore in collaboration with the EU is to push for Global Green Hydrogen Alliance in line with the International Solar Alliance.

Global Gateway

Global Gateway is a € 300 billion new European global investment strategy to boost smart, clean and secure links in digital, energy and transport sectors. A crucial component of the strategy is climate and energy. Under this strategy, the EU aims to invest in both mitigation and climate resilience and clean energy across the globe. It will promote green technology exchanges and reinforce energy security. With shared values and goals, India could become one of the key countries in this European strategy. When India is seeking foreign investment and collaboration in green energy and clean technology, the EU’s Global Gateway synergizes aptly with India’s ambitious climate goals and can support its green transition.

In conclusion, India and the EU are going through a severe energy crunch. Coupled with their reliance on “dirty” energy sources like fossil fuels, the EU and India make natural partners to explore alternative safer energy sources. EU Commission President Ursula Von Der Leyen’s visit to India and Indian PM Narendra Modi’s subsequent visit to Europe shows that political brass in both the parties understands the importance of cooperation for a smooth transition to clean energy sources. Co-development of new advanced technologies and knowledge sharing of the existing ones will help both parties deal with climate change. European investments in Indian startups and government initiatives can significantly boost the process of cutting down on oil, gas and coal for energy production. Clean, affordable and reliable energy sources will help India in socio-economic development, providing electricity to millions of people while also giving the EU a much-needed opportunity in the diversification of energy sources in changing geopolitical landscape.

(Dr Yatharth Kachiar is an Assistant Professor, and Aditya Chauhan is a Research Scholar at Manipal Centre for European Studies, Manipal Academy of Higher Education (MAHE), Karnataka. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).