Achieving Carbon Neutrality: US and India Weigh Policy Options

Abstract

The paper takes a critical look at the US and India positions on achieving carbon neutrality as per their commitment to the Paris Agreement on Climate Change. These are based on the climate change policies of the leaders of the two countries, President Joe Biden, and Prime Minister Narendra Modi, at the COP 26 summit held in Glasgow, Scotland in November 2021. Policy tools to achieve carbon neutrality such as cap and trade and carbon tax (both market-based approaches), regulations (command and control approach) and other economic incentives such as tax credits and subsidies are examined. Based on various empirical research published in the literature regarding the two countries, an assessment is made regarding the use of these tools to achieve the goals of efficiency, equity, liberty, and sustainability in the two countries. Carbon taxation at the national level is currently missing in both countries and has the potential to be a revenue source of climate finance. The US needs to assert its leadership among the OECD donor countries to provide climate finance to developing countries and direct more of such finance for adaptation to climate change among developing countries. Low Carbon Technology (LCT) transfer through trade is low among both countries and there is a need to accelerate this process. Innovations that are occurring in both countries presently in nuclear power, hydrogen power and other clean energy such as solar, hydroelectric, geothermal and biomass can provide a great fillip to early achievement of net zero emissions. International cooperation and partnership between the US and India are growing in pursuing nuclear and solar as clean fuels. However, stepped up co-innovation in clean energy between the two countries holds great dividends to achieve carbon neutrality in both countries.