Donald Trump’s decision to pull the U.S. out of the Paris climate accords is incredibly narrow minded, and short-sighted. It will undermine the U.S. economy and in doing so hurt the working people who voted him in.
However, one country and one climate skeptic is not going to stop the global energy transition.
India and China are leading the charge to a more sustainable, lower-emissions global economy. Technology- and economics-driven trends have reached critical mass and are now unstoppable.
India and China are the two most important countries globally in terms of momentum in energy market transformation, achieving economic growth rates more than double those of the U.S.
The Paris Climate Agreement is a critical historic milestone and its result have been an acceleration in global investment, renewable cost deflation and technology development.
NO BETTER EXAMPLE COMES TO MIND OF ENERGY TRANSITION than India, the second most populous country in the world and one with economic growth of 7-8% annually, which makes it the world’s fastest-growing major economy.
Some were quick to question the India government’s ambitious energy-transformation plans rolled out two years ago, but coal imports have already dropped dramatically and India is on track to have a remarkable 275GW of renewable energy capacity by 2027, underpinned by an economically sensible $1 trillion investment plan.
The recent cancellation of more than 20GW of coal power projects in May coupled with a record low solar tariff of Rs 2.44 per unit ($0.038/kWh) are the strongest indications yet that transformation in India is gaining rapid momentum. The caliber of the global financial institutions bidding into India’s solar power infrastructure tenders is a strong endorsement too of this leadership.
It will have significant ripple effects into other transforming markets, as is already seen in Australia, Chile, Mexico, South Africa, and the United Arab Emirates.
Solar power in India is now cheaper than imported coal and even very competitive with domestic coal plants— something few people would have believed possible until recently. What’s more, the costs continue to decline monthly as technology and efficiency improve. Major new coal plant proposals can no longer compete on price.
Indian utilities are also changing. NTPC (National Thermal Power Corp.) despite its deep historical connection to coal-fired electricity-generation technology, is becoming a key renewable energy enabler. Its shift away from the increasingly stranded assets of the fossil fuel industry cannot be underestimated.
Both India and China are also rapidly deploying energy efficiency initiatives, undertaking massive, transformative electricity grid expansions and renewable energy deployments at unprecedented rates in a virtuous deflationary cycle.
Both have committed to accelerating these endeavors, and to stay the course on their Paris commitments. Both are focus on investment and job creation alongside pollution control as primary economic and political drivers, regardless of what the U.S. does.
American isolationism will only hasten the Asian Century—and leave the biggest opportunities in the world’s energy transformation open to both China and India.
Tim Buckley is IEEFA’s director of energy finance studies, Australasia. A version of this commentary appeared originally in the Hindustan Times.
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