Chief Economic Advisor (CEA) V Anantha Nageswaran said on Friday that India can expect to reap a windfall gain from Donald Trump’s second term in the form of reduced energy costs.
President-elect Donald Trump has historically been sceptical about renewable energy. His previous administration prioritised fossil fuels, rolling back environmental regulations to boost coal, oil, and natural gas industries
Chief Economic Advisor (CEA) V Anantha Nageswaran said on Friday that India can expect to reap a windfall gain from Donald Trump’s second term in the form of reduced energy costs.
Speaking at the Tenth Anniversary Celebration of the University of Chicago Center in New Delhi, he said, “The energy costs will remain more affordable under the new administration than might have been possible alongside a single-minded pursuit of energy transition and diversification.”
In his previous tenure as President, Trump had shown his well-known scepticism for renewable energy by prioritising fossil fuels and rolling back environmental regulations to boost the interests of his core constituencies: coal, oil, and natural gas industries.
In the four years of the Biden administration crude oil prices have see-sawed, often wildly, particularly in the wake of Russia’s invasion of Ukraine in February 2022 when Brent crude surged past $100 per barrel—the first time since 2014. In late 2023 after OPEC+ cut production alongside a stronger-than-expected demand recovery, prices again shot past $90 per barrel. Conflicts in the Middle East have contributed to hardening crude prices in 2024, with OPEC oil prices standing firmly at $80.48 per barrel.
President-elect Donald Trump will take office in January 2025.
“The dependence on China will be pervasive whether it is for critical minerals, rare earths or processing. In the last one month or so since the announcement of the US election results, China has been tightening restrictions on the export of critical minerals and rare earths, be they for defence purposes or for energy transition,” said V Nageswaran.
China straddles the global mineral refining space like a colossus. It processes 68 per cent of the world’s nickel, 40 per cent of copper, 59 per cent of lithium, and 73 per cent of cobalt, effectively controlling the refining space. As the world leader in producing 20 essential minerals, China accounts for 85 per cent of rare earth processing and 60 per cent of global production. Though China is not a mining hub, it has established itself as the global mining powerhouse by investing heavily in mining over the years. In 2023 its investments reached a staggering $19.4 billion.
Nageswaran also warned that due to the dependence on China for various renewable energy technologies, switching from fossils fuels to renewable energy might create new risks for the country.
The CEA also dismissed talks about India benefitting from any actions, whatsoever, that the incoming US administration might take with respect to China, dubbing such talks as ‘superficial’. “I think this is superficial. If India were to have truly benefitted from actions against China, it would already have done so, given the global shift towards the 'China Plus One' strategy," he emphasised.
At various times in past the CEA has emphasised on ‘creating an ecosystem’ that companies have in China to benefit from the ‘China plus one strategy’. Earlier the CEA had suggested that the country needs to figure out ways to integrate China into its supply chain, before thinking about integrating itself into the global supply chain. "India cannot bypass or isolate itself from China’s supply chains if it aspires to be a significant player in the global supply chain,” he was quoted as saying.