Partnerships in energy ranked high during European Commission President Ursula von der Leyen’s visit to India. The European Union is committed to decarbonising its economy by 2050 while India has set a target of 2070 for net zero emissions.  Wopke Hoekstra, the European Commissioner for Climate Net Zero and Clean Growth told the Economic Times that “the sky truly is the limit for the future” of the India-EU partnership.

Hoekstra discussed increasing EU imports of solar panels, wind turbines, and energy storage from India. The recently unveiled EU Clean Industrial Deal aims to diversify its supply chains in the face of geopolitical instability. India could become an important part of this reinvented supply chain. “I have the ambition to make sure we have way more Indian manufacturing in the domains of solar and wind, and storage coming into the EU,” Hoekstra said. 

Becoming Carbon Competitive  

He also identified carbon pricing and carbon markets as another area of partnership. Again, the Clean Industrial Deal plans to simplify its Carbon Border Adjustment Mechanism (CBAM) to measure carbon. The CBAM effectively works as a tax for Indian exporters because it imposes stringent carbon emissions reporting requirements on importers and significantly increases prices for goods in carbon-intensive industries like steel and iron. The EU is an important destination for Indian steel, iron, and aluminum. But the competitiveness of Indian products is at risk because these industries use coal-generated electricity. India’s nuclear push, which is aimed at installing captive reactors in carbon-intensive industries, could boost their carbon competitiveness; but it will take time.   

During her visit, von der Leyen said a free trade agreement, which has been in the works since 2022, will be finalized by the end of this year. The agreement will open the door for more trade between the two regions. The two countries have already established a working group to discuss areas of cooperation in clean and green technologies including battery recycling and marine plastic litter. 

A New Market for Manufacturers

Europe’s enthusiasm for renewable energy dovetails nicely with a change of guard across the pond. It crafts new markets for Indian manufacturers in the currently volatile geopolitical context. For example, the United States accounted for approximately 96 percent of all PV panels exported by India under President Biden’s administration. His successor, however, has changed America’s energy trajectory, exhorting the fossil fuel industry to “drill, baby, drill”. Europe  is an untapped market for Indian solar panel exports. Europe’s experience in developing a carbon market could also aid India’s efforts to develop a similar initiative at home. The subtext of these moves is an increasingly unpredictable geopolitical environment with the potential to disrupt supply chains. 

Adani Energy Plans U.S. Expansion 

Even as India is planning to become a major exporter of renewable energy products, one of the country’s biggest energy conglomerates is planning to double down on fossil fuels. The Adani Group is reviving its plans to invest in energy infrastructure, including petrochemicals, in the United States, according to the Financial Times. Four unnamed sources told FT that the group was “reactivating” its plans to invest there. It had already pledged to invest $10 billion, and create 15,000 jobs, following Donald Trump’s election to the top post last year. 

But those plans were put on hold after the filing of bribery charges against Adani and his nephew, Sagar Adani by US federal prosecutors. They said Adani had misled US bond investors in Adani Energy by claiming to be anti-corruption and anti-bribery when, in fact, the company had paid more than $250 million in bribes to Indian government officials for lucrative renewable energy contracts. Adani stocks fell in response to the indictment. While they have recovered since, the threat of being brought to court was still present. 

President Trump paused Foreign Corrupt Practices Act (FCPA) in the first week of February. It is a respite for the Adani group. The FT report states that it was a “big relief” for the conglomerate because “it heightened expectations that the case against him would eventually collapse.” 

Two companies within the Adani group fold are focused on energy. Adani Energy Solutions is India’s largest private transmission company while Adani Green Energy dubs itself one of the country’s biggest renewable energy companies with significant investments in solar, wind, and energy storage. The Adani group is one of the biggest developers of coal mines in India and the third-largest backer of coal power expansion. This dubious distinction, in an age of renewable energy, could have been a hindrance to the group’s future fundraises. 

However, a global turn towards fossil fuels this year means that the Adani group is well-placed strategically. Interestingly, Hindenburg Research, the firm that released reports critical to Adani, closed shop last month, further diminishing the matrix of threats to Adani.