Building Blocks of an India-U.S. Energy Future

General Studies Paper-2

Context: Recently, the United States Vice-President highlighted its willingness to cooperate with India more closely on energy and defence.

• India’s foreign policy establishment outlined the need for cooperation on energy, defence, technology and the mobility of people.

India-U.S. Cooperation in Energy and Defence

• Strengthening India’s Energy Security: India’s energy security is anchored in three imperatives:
• Stable and Predictable Energy Resources: Ensuring access to reliable energy supplies to support India’s rapid economic growth.
• Minimizing Supply Chain Disruptions: Strengthening supply chains for critical minerals and energy infrastructure to reduce dependency on geopolitical uncertainties.
• Advancing Sustainability: Expanding the role of nuclear energy and clean technologies to achieve India’s net-zero targets.
• Nuclear energy and critical minerals play a pivotal role in India’s clean energy transition, positioning them as foundational pillars for a stronger India-U.S. energy and technology partnership.

Critical Minerals

• These are those minerals, such as lithium, graphite, cobalt, titanium, and rare earth elements that are essential for economic development and national security.
• These are essential for the advancement of many sectors, including hightech electronics, telecommunications, transport, and defence.
• China controls nearly 90% of rare earth processing, and its recent restrictions on exports highlight the fragility of global supply chains.
• In response, India and the U.S. signed a MoU in 2024 to diversify these supply chains.
• It can bolster economic security, technological innovation, and strategic autonomy.

Nuclear Energy Security

• India’s nuclear energy capacity currently stands at just over 8 GW, contributing only 2% of the country’s installed power capacity.
• To meet the 2047 target of 100 GW, India must commission 5-6 GW annually starting in the early 2030s.
• Studies by CEEW suggest that achieving net zero by 2070 could require over 200 GW of nuclear capacity under certain scenarios.

Strengthening Supply Chain Transparency For Critical Minerals

• India-US Critical Minerals Consortium could explore joint extraction and processing projects across Africa, South America, and Southeast Asia.
• Establishing an India-U.S. Mineral Exchange, a secure digital platform for real-time trade, investment tracking, and mineral traceability.
• Co-developing a Blockchain-based Traceability Standard: It is inspired by the EU’s Battery Passport which would prevent supply chain disruptions and ensure ethical sourcing.
• Joint Strategic Stockpiles of Key Minerals: For leveraging existing storage infrastructure such as India’s Strategic Petroleum Reserves and the U.S. National Defense Stockpile for cost-effective deployment.
• Investment in Energy Infrastructure: Platforms such as the U.S.-India Initiative on Critical and Emerging Technology (iCET) could advance data-sharing protocols, innovation corridors, and workforce development.

Key Reforms for Nuclear Expansion 

• Reducing Deployment Timelines: Standardizing reactor designs, streamlining approval processes, and improving skilled project delivery are essential.
• Strengthening Financial and International Cooperation: India’s power sector exposure stands at $200 billion.
• Collaboration with global firms for technology transfer, co-creation, and waste management solutions is crucial.
• Enabling Private Sector Participation: Small Modular Reactors (SMRs), with their lower capital expenditure, flexibility, and reduced land requirements, can become viable with private sector involvement.
• Amending the Civil Liability for Nuclear Damage Act, 2010 to encourage private investments in nuclear power plants, fostering technological innovation and financial backing.
• Prioritizing Nuclear Safety and Waste Management: As India leads in SMR manufacturing, adopting centralized waste management and repurposing strategies is essential.
• Long-Term Energy Security Amid Global Uncertainty: The IMF’s latest World Economic Outlook highlights rising trade and tariff tensions, impacting global energy markets.

Challenges and Future Prospects

• Geopolitical Risks: China’s restrictions on rare earth exports highlight the need for secure and diversified supply chains.
• Policy Alignment: Both nations must harmonize regulatory frameworks to facilitate cross-border investments in energy infrastructure.
• Technology Transfer: Strengthening collaborative R&D will accelerate the adoption of next-generation energy solutions.

Conclusion

• The India-U.S. energy partnership is poised to play a crucial role in global energy security and sustainability. By focusing on critical minerals, nuclear energy, and clean technology, both nations can drive economic growth and climate resilience.
• Strengthening bilateral agreements and strategic investments will ensure a stable and sustainable energy future.