India-Middle East-Europe Economic Corridor: Potential for Increasing Energy Flows

Executive Summary

• The IMEC corridor is one of the most ambitious transcontinental energy partnerships of the 21^st century, linking continents, cultures, and markets in a dynamic new framework for shared prosperity.
  
  
• Envisioned as a transcontinental artery of energy trade, IMEC connects regions that together represent 40 percent of the world’s population and 50 percent of global GDP. Secure, reliable and affordable energy flows from IMEC partners are the lifeblood of economic growth and prosperity across the world.
  
  
• IMEC partners dominate the global energy landscape, collectively accounting for over one-third of world trade in crude oil and petroleum products. IMEC partners accounted for 27 percent of India’s crude oil imports in the financial year ending in March 2025.  Secure and affordable energy is accelerating economic growth and improving quality of life in India, key IMEC partner and the largest growth market for energy in the foreseeable future.
  
  
• India’s fast-growing energy demand, combined with its proposal to invest in two greenfield refineries that will expand product export capacity make it a natural anchor for long-term energy partnerships. The resilience of conventional supply chains, supported by pipelines, tanker fleets, and established logistics infrastructure, ensures that IMEC’s energy linkages remain stable even amid global volatility.
  
  
• Plans for increasing low emission energy flows in the longer term are gathering momentum but the pace of progress will depend critically on cost competitiveness and scale of supply and demand. Without incentives for low-cost production on the supply side and offtake guarantees on the demand side, low emission energy sources are unlikely to become affordable. If the affordability criteria are not met, adoption of low emission energy sources is unlikely to meet expectations.
  
  
• Transcontinental power pools will enable IMEC partner countries to meet their electricity demand through international trade while also substantially reducing electricity costs by developing the most suitable and least expensive low emission energy sites.
  
  
• Progress in initiatives for transporting conventional and low emission hydrogen from low-cost production sites in India and the Middle East to Europe is evident. India and the Middle East, with their abundant low emission energy resources and strategic geographical locations, are poised to become major supply hubs, with ambitious production targets.
  
  
• Given its developmental goals, India has deferred its net-zero emissions target to 2070, despite sustained diplomatic pressure from the Global North, particularly the EU advocating a 2050 timeline. CBAM, which unjustly shifts the burden of emission reductions onto the Global South, will further delay net zero achievement by India and the rest of the Global South as it will increase costs and slow down low emission energy flows as envisaged by IMEC.
  
  
• CBAM poses a significant challenge to the energy trade dynamics with the Global South, specifically India within the IMEC framework. Products originating from India exhibit a higher embedded emission intensity compared to EU benchmarks. Imposing CBAM will result in elevated import tariffs, effectively internalising the cost of EU emissions under its Emissions Trading System (ETS).
  
  
• IMEC partners must call for aligning trade and energy policies to unlock the corridor’s full potential. Coordinated action to defer the EU’s CBAM in energy trade among IMEC nations must be among the key priorities.