Could India and China co-operate on energy?

India and China have competed on energy resources in the past, but there have been instances of co-operation which have been mutually beneficial, writes Aarti Seksaria.

Aarti Seksaria is a Business Development Manager at contentgroup.

India and China have long been associated with great power rivalries and competition, and ongoing border disputes have led to conflict in recent years. But the two Asian giants have also cooperated with each other to support their energy security needs. Such great power cooperation tends to receive less attention in and beyond Australia, as Australia has looked to India to help counter-balance China. But these examples of cooperation are important for understanding power dynamics in the Asian region.

Touted to be the world’s two largest economies by 2050, India and China need an adequate supply of electricity and energy resources to sustain their growth, and continue to rely on coal, oil and gas, despite growing investments in renewable energy. These non-renewable resources are of limited supply and vulnerable to disruptions in the Indian Ocean region, geopolitical uncertainties in the Middle East and Africa, and overseas competition. A lack of energy production is already having an effect, with blackouts across India and China in 2021 due to shortages of coal.

Energy scarcity can cause domestic unrest, disrupt public services, hinder economic growth and trade, and/or threaten government legitimacy and national security. To mitigate such consequences, both countries are treating ‘energy security’ as a matter of national importance.

India and China have previously supported their state-owned companies in acquiring energy resources in their immediate and extended neighbourhood, resulting in both countries competing to acquire the same resources. But in recent years we have seen a number of cooperative efforts between the Asian neighbours.

Between 2002  and 2018, India and China have issued a series of Memorandums of Understanding on energy exploration, bidding information and sustainability coordination. In these instances, both countries are choosing collaboration for absolute gains instead of competition for relative gains,  prioritising a cleaner, greener future for its people over competition for fossil fuels abroad.

Alternatively, the way India and China joined hands on the language for ‘phasing out’ coal at COP26 showed how both ‘developing’ countries have unifying views on environmental governance. Chinese state-owned tabloid Global Times even went as far as to encourage India to cooperate with China in building up its ‘soft power’ while it looks to compete in ‘hard power’ areas.

India-China cooperation is not often reported, but needs to be recognised when it happens. Such recognition forces us to consider – if two historical rivals, whose bilateral engagements are clouded by decades of mutual distrust, can join hands for energy security…what is the potential for two democracies with shared interests?

Australia and India’s current energy trade relations are driven by coal, with India quick to capitalise on the opportunities presented by a strained Australia-China relationship. But changing green agendas show that both countries have much to benefit from advancing their energy diplomacy.

The Letter of Intent on New and Renewable Energy Technology resulting from the fourth energy dialogue is an appreciation of this opportunity by both India and Australia. It confirms that this partnership recognises the potential of energy diplomacy and is working on it. We must maintain and build on this momentum.

India will soon surpass China to become the ‘world’s largest energy growth market’. Prime Minister Narendra Modi’s SAGAR initiative, New Delhi’s intentions to reduce dependency on Chinese technology in Indian power plants or business tycoon Mukesh Ambani’s pledge to invest $80 billion in green projects are examples that instil confidence in the country’s ‘self-reliance’ policy. But external support can benefit India in meeting its growing demand, and Canberra must become India’s “partner of choice” for meeting this demand.

Australia is showing greater interest in leveraging bilateral relations to mitigate its own concerns over domestic energy supply shortage. The signing of the US-Australia SPR Agreement in 2020 is a recent example. United in their vision for a peaceful and prosperous Indo-Pacific, India and Australia should also outline a clear roadmap for energy cooperation in the Australia-India Comprehensive Economic Cooperation Agreement.

Energy security is a ‘critical area’ in need of strong governance and collaboration with strategic partners in the Indo-Pacific region. Securing energy supplies trading through the Indo-Pacific is essential to all countries in the region including India and Australia. Energy security will only get more attention as citizens become more interested in government commitments towards climate change adaptation and a low-emissions future. India and Australia can also demonstrate greater leadership and a shared responsibility for catalysing green energy transformation in the region, by implementing initiatives such as the International Solar Alliance (ISA).

The Australia-India relationship is moving onwards and upwards, and the field of ‘energy security’ contains untapped opportunities to sustain this trajectory. Energy cooperation can not only strengthen the Australia-India bilateral relationship, it gives hope for salvaging the time-tested India-China relationship. In either case, it has the potential to foster the development of a more secure, prosperous and green Indo-Pacific region.