Renewable energy could strengthen friendly ties between India and Australia (2023)

From raising funds for renewable energy infrastructure to building strong supply chains for critical minerals, the opportunities for cooperation between the two countries are numerous.

Author: Vibhuti Garg

In a sign of deepening India-Australia relations, Prime MinisterNarendra ModiHe will visit Australia for bilateral talks with Prime Minister Anthony Albanese despite the cancellation of the Quad summit in Sydney.

His visit follows Albanese's visit to India in March, in which renewable energy, green hydrogen and solar energy and key mineral supply chains were high on the agenda, with a stop in Ahmedabad for his fourth panel ball test.

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Increased commitment to the 'green economy' and climate finance in international fora such as the G20 and the Quad will help India and Australia meet their ambitious net-zero emissions targets, promote sustainable development and mitigate the impact of climate change.

At the same time, the two countries hope to strengthen bilateral cooperation.clean energyresearch and innovation.

This will require increased investment, technology transfer and knowledge sharing.

Fundraising for Renewable Energy Infrastructure

Australia's pension funds, with trillions of dollars in "patient" capital and a growing need to address climate risks, have the potential to contribute to India's renewable energy journey.

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India's goal to generate half of its electricity capacity from non-fossil fuels by 2030 represents a great opportunity for institutional investors to finance renewable energy infrastructure, energy storage, and grid expansion and modernization.

Solar power and key mineral supply chains

India and Australia have formed a solar task force to advise the two governments on solar photovoltaic (PV) deployment and supply chains.

The International Energy Agency (IEA) has warned that countries need to diversify their solar supply chains. India's efforts to boost domestic solar PV production have reduced reliance on Chinese imports of solar equipment by more than 90 percent previously. It is also developing its solar power export capabilities.

India's solar module manufacturing capacity could reach 110 gigawatts (GW) per year by 2026, according to a recent study by the Institute of Energy Economics and Financial Analysis (IEEFA) and JMK Research. India will achieve self-sufficiency in solar PV modules at this level and further expand exports.

Australia is also looking to reduce its reliance on solar panels imported from China and is looking to develop domestic production. The government established a $15 billion National Reconstruction Fund to encourage investment in domestic manufacturing projects for the industries of the future, including zero-emissions and solar technologies.

Likewise, both countries would benefit from expanding trade and cooperation in critical minerals.

India is a major importer of key minerals such as lithium, cobalt and nickel used in electric vehicle (EV) batteries, while Australia, as a major producer of key minerals, has an opportunity to facilitate further growth of the exports and investment.

In its 2023-24 budget, the Australian government announced A$57.1 million over four years to help the key minerals sector build strategic and business partnerships around the world.

Developing new and existing partnerships will help identify investment opportunities and strengthen supply chains to accelerate India's net zero emissions plans.

Australia can also ensure the transfer of key mineral exploration, mining and processing expertise and technology to support the successful mining of India's newly discovered lithium deposits.

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India has ambitions to become a world leader in green hydrogen as part of its efforts to decarbonise emission-intensive industries, including fertilizer and steel production. As part of the National Hydrogen Mission, the government has set a goal of producing around 5 million tons of green hydrogen per year by 2030.

Both India and Australia offer research opportunities for the development of green hydrogen and green ammonia. IndianTrusted IndustriesThe company is reportedly planning green hydrogen investments in Western Australia. Indian company TheGreenBillions Limited recently announced plans to invest in sustainable energy projects in Australia, including green hydrogen, with the support of the India-Australia Strategic Alliance, an industry body for Indian and Australian companies.

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JSW Future Energy Co., Ltd.JSW Energysubsidiary, has partnered with Fortescue Future Industries to develop green hydrogen projects in India.

India is likely to fuel the growth of global steel production in the coming decades. In its stated policy scenario, the IEA expects Indian steel production to nearly double by 2030 and quadruple by 2050. This equates to over 150 tonnes of new steel capacity added by 2030-31.

Accelerating the transition to green steel technologies will be critical to supporting India's and the world's emission reduction targets.

As the world's leading producer of iron ore, there is a large but untapped economic opportunity to develop a local green steel industry, and Australia can continue to develop partnerships with India for green steel research and innovation in line with India's updated economic strategy. .

Opportunities include investing in the development of technologies to enable the production of green steel, green hydrogen supply chains in the steelmaking process, and the necessary capabilities to manage green steel assets. This represents a great investment opportunity for Australian superannuation funds looking to support the global transition to net zero emissions.

Renewable Energy Best Practices

Whether it's a small step or a big one, Indian and Australian companies, industry experts, academics and researchers can work together to identify areas for collaboration and share best practice and solutions.

One example of this is the launch of the Australia-India Energy Center (AICE), a virtual hub established by the Indian Institute of Technology (IIT) Madras and a consortium of Indian and Australian universities and research institutions. AICE aims to work towards the United Nations Sustainable Development Goal 7 (access to affordable, reliable, sustainable and modern energy for all).

Both countries can benefit from learning from each other. In South Australia, a state with high wind and solar penetration, the Australian Energy Market Operator (AEMO) manages a large amount of variable renewable energy in the electricity system. South Australia's experience in integrating renewable energy could help other states and countries transition from fossil fuel based grids to grids with a high share of renewable energy.

Australia, the world leader in rooftop solar installations per capita, can share its experience in integrating distributed energy resources (DER) into the grid. While India has so far mainly focused on expanding grid-scale renewable energy, accelerating DER adoption will play a significant role in meeting its renewable energy targets.

just a transition

Policymakers in India and Australia face the challenge of managing a just transition as their economies move away from fossil fuels.

Both countries should use international fora such as the G20 and the Quad as platforms to facilitate the transfer of technology and capital from developed countries to emerging economies in support of a just global transition.

There is also an opportunity to collaborate on strategies to address the impact of the EU Carbon Cap Adjustment Mechanism (CBAM). The policy aims to reduce carbon dioxide emissions by imposing a border carbon tax on goods imported into the EU from countries with weaker climate policies.

The European Union is India's second-largest export market, with exports of goods and services set to reach €64.6 billion by 2021, and is Australia's third-largest trading partner after China and the United States. India and Australia must work with the EU to reduce carbon emissions, improve data collection and reporting, diversify export markets and develop low-carbon industries.

Australia is seeking a more comprehensive trade deal with India, building on the Trade and Economic Cooperation Agreement it signed last year. Both have similar priorities and objectives in renewable energy. Free Trade Agreements (FTAs) will increase trade, reduce or eliminate tariffs on goods, and create new opportunities for Australian and Indian companies to expand into their respective markets.

Most importantly, it will remove barriers to private capital transfers. The transition to renewable energy requires significant investment in infrastructure and technology, and increased public and private capital flows will be key to helping both countries meet their climate goals.

Vibhuti Garg is Director (South Asia) of the Institute for Energy Economics and Financial Analysis (IEEFA). Garg is traveling to Australia for the Canberra Scholarship Program organized by the Australian Department of Foreign Affairs and Trade.


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