According to the Indian Ministry of Power, India currently has a power-generation capacity of more than 206 gigawatts, among the highest in the world. More than 56 percent of the country's power generation relies on coal, while hydropower and natural gas contribute 19 percent and 9 percent, respectively. India's dependence on coal — much of it imported — and the difficulties associated with its production, transport and land acquisition for mining are just some of the central government's historical challenges in implementing its energy goals.
This dependency on imports also extends to uranium. Although India possesses significant reserves of thorium, an alternative nuclear fuel, the country lacks the technological expertise to take advantage of those domestic reserves. India's 20 nuclear power plants currently supply about 2 percent of overall domestic electricity consumption, but New Delhi hopes to add 63 gigawatts of nuclear power within the next two decades. This increase would raise nuclear power's overall share of domestic electricity production to 8 percent by 2030. However, India's status as a non-signatory nation of the Nuclear Nonproliferation Treaty has complicated its efforts not only to source nuclear fuel, but also to attract large-scale investment into the government-controlled nuclear power sector. Nuclear power cannot meaningfully reduce India's reliance on coal-based electricity production, due to its high cost and the lack of substantial domestic uranium reserves.
India's Nuclear Relationship with Suppliers
After years of negotiations, Washington and New Delhi signed the U.S.-Indian civilian nuclear agreement in 2008. With this agreement, Washington sought to facilitate India's entrance into the global nuclear market and lay the groundwork for a deeper strategic partnership with New Delhi.
Since the signing, however, the deal has run into several obstacles. India did not fulfill the United States' expectation of allowing U.S. firms to corner the Indian nuclear market, preferring instead to entertain multiple bidders. The deal was also hampered by legislation pushed by Singh's then left-leaning coalition partners to make foreign suppliers, manufacturers and operators liable for any accidents. U.S firms Westinghouse and GE Hitachi still signed memorandums of understanding with New Delhi for projects such as the proposed Mithivirdi nuclear power plant in Gujarat, but the Indian market did not turn out to be as friendly as Washington had hoped.
Australia possesses about 40 percent of global uranium reserves and has had its own difficulties supplying India's civilian nuclear fuel needs. Australia had long refused to sell uranium for peaceful fuel purposes to New Delhi because India is not a signatory of the Nuclear Nonproliferation Treaty and due to concerns about the Indian-Pakistani relationship. In late 2011, Gillard successfully passed legislation allowing sales of uranium to India as part of a larger initiative to develop a strategic partnership with New Delhi. While India and Australia share many regional concerns, they will not necessarily cooperate closely on foreign policy. New Delhi may accept Canberra's offer of uranium fuel supplies while continuing to pursue its own foreign policy prerogatives to the potential consternation of neighbors.
Opportunities for Energy Cooperation
Australia is attempting to shift its economic reliance away from iron ore and coal, its two primary export commodities, since Chinese long-term demand for these resources is expected to decrease and production costs are rising. With Germany and Japan diversifying away from nuclear power, Australia has been seeking new export markets for uranium. Also, Japan's nuclear power firms have been seeking export markets for their nuclear technology. With its massive consumer base and growing need for power, India could offset waning consumption in both Germany and Japan.
According to the International Energy Agency's 2011 World Energy Outlook, India is expected to increase its demand for nuclear energy by nearly 400 percent from 2015 to 2035. By comparison, Japan will increase its nuclear energy demand by 70 percent during the same time period, assuming their domestic consumption returns to the level it was before the 2011 tsunami and resulting nuclear plant disaster. Although India is not expected to use nuclear power heavily due to its reliance on coal, it still is a potential high-growth consumer market for Australian uranium exports. Officials from both Australia and Japan have expressed interest in expanding nuclear ties with India in recent weeks.
The United States also has a vested interest in encouraging regional cooperation through this Indian-Australian partnership, which helps explain the pressure Washington has been placing on Canberra to resume uranium exports to India. In addition to economic benefits, an Indian transition from French and Russian uranium suppliers to regional ones could bring Japan's technological power and Australia's resource wealth into cooperation with the large consumer and labor base of a continental Asian power. During a period of increased East Asian tensions, it is tempting to look past India's historically troubled relationship with foreign investment and see the subcontinent as a manufacturing and consumer base for Japanese goods using Australia's commodity and energy resources. India's proximity to Southeast Asian states such as Myanmar and its maritime access to West Indian Ocean markets in the Middle East and Africa could also magnify the economic results of this Indo-Pacific cooperation. This long-term repositioning requires a strong central government in India capable of executing the necessary economic and political reforms — the sort of goal-driven central government policies New Delhi is attempting to demonstrate with its nuclear energy initiatives.
This integration fits into both the United States' renewed foreign policy focus on the Asia-Pacific region and the emerging U.S. foreign policy doctrine that calls for more selective engagement in global conflicts and a greater reliance on allies to maintain balances of power. By encouraging and empowering greater coordination among these regional powers, the United States is trying to increase its ability to rely on regional partners to act in the United States' interest in regional conflicts without direct U.S. involvement. India, Australia and Japan also bound most of Asia, including China, forming a ring of U.S. influence around the region. While India has mostly avoided long-term foreign policy alignments since its independence, nuclear power provides a useful venue for Japan and Australia to pursue deeper cooperation with the continent's largest democracy. Despite the commercial setbacks to U.S.-Indian civilian nuclear deals, India's developing nuclear relationships with Japan and Australia strengthen a strategic framework encouraged by Washington in the region, one in which partners with common interests find more ways to politically, economically and militarily integrate to defend against potential threats.
While the benefits of increased coordination are evident, there are still constraints. Nuclear power in India is fully under the control of the central government. Russia and China would rather not see greater collusion among India, Australia and Japan, since India is a vital market for Russian nuclear energy and arms exports and since Beijing is generally nervous about increased political cooperation in its periphery. China is also a key consumer of Japanese and Australian export goods. So despite the myriad reasons for Japan and Australia to continue developing their long-term relationships with India, economic links with China and other regional concerns will necessitate a slow, careful progression. As Gillard said to Australian media before her trip to India, sales of uranium to New Delhi are still a few years away. But the dialogue occurring now is slowly setting the foundation for increased dialogue and cooperation between these key Indo-Pacific states.