Paper
Energy transitions amid an economic transformation
Arunabha Ghosh, Ayesha Dash
June 2025 | International Cooperation
Overview
Countries undergoing traditional transformations witness economic prosperity before undergoing an energy transition. However, this trajectory looks much different for emerging markets and developing economies like India, where multiple energy transitions are occurring simultaneously with rapid economic growth. Emerging markets are key to the global energy transition and the locomotives for global growth. If they do not shift, or “leapfrog”, to clean energy sources, there will be no global energy transition. As an example of the transitions underway in emerging markets and developing economies worldwide, this paper discusses India’s four central energy transitions—traditional to modern energy sources, rapid urbani-zation, growth of sustainable energy infrastructure, and deeper integration into global energy markets—which impact the sustainable development goals. This paper then delves into the challenges associated with the energy transition for emerg-ing markets like India. Financing for clean energy continues to be a high cost for emerging markets; clean energy supply chains are highly concentrated, impacting materials, minerals and intermediate and finished products; and new markets for the fuels of the future are limited by a lack of common standards across jurisdictions. For the rapid growth of renewables in the decade of leapfrog, the more structural problems in the energy transition must be resolved through innovative solutions and international cooperation.
Key Highlights
- Non-linear transition path: Unlike developed countries that undergo economic transformation before transitioning to clean energy, emerging markets like India are experiencing both simultaneously.
- Not one, but many energy transitions: Emerging markets are also experiencing multiple energy transitions simultaneously, such as, a shift from traditional to modern energy sources, rapid urbanisation, growth of sustainable energy infrastructure, and deeper integration into global energy markets.
- Key persisting vulnerabilities: Three structural problems in the energy transition must be resolved for the rapid growth of renewables in the leapfrog decade. Financing for clean energy continues to be expensive for emerging markets. Clean energy supply chains are highly concentrated, impacting materials, minerals, intermediates, and finished products. Further, new markets for decarbonised hydrogen are also limited by a lack of common standards across juris-dictions.
- Call for innovation and international cooperation: Structural barriers to a successful energy transition across emerging markets must be addressed through innovation and international cooperation on all fronts.
- To effectively channel climate finance, the three ‘I’s are important—incentives, instruments and institutions.
- For secure clean energy supply chains, indigenisation of cleantech manufacturing, a new paradigm of technology co-development, and a multitude of opportunities for cooperation on critical minerals—relating to data transparency, exploration, processing, and circularity—can create local and resilient supply chains which could significantly reduce import dependence.
- For common standards, a robust rules-based architecture will secure the supply and demand of decarbonised hydrogen by increasing transparency, governing technology development, supporting diversified production and value chains, trade and transport, and safe storage and use.
“EMDEs, as the locomotives of the global economy, are likely to invest more in the clean energy transition as it becomes a part of their broader green industrialization strategy, giving them multiple opportunities to become a part of the global supply chains in the clean economy of the future.”
