IMEC: A Blueprint for Transcontinental Energy Integration

IMEC offers a blueprint for transcontinental energy integration—linking markets, securing affordable energy flows, and shaping a more connected global energy architecture

The India-Middle East-Europe Economic Corridor (IMEC) represents one of the most ambitious energy partnerships of the 21^st century, with the United States (US), Saudi Arabia, the United Arab Emirates (UAE), the European Union (EU), France, Germany, and Italy as partners. Conceived as a transcontinental artery, the corridor is designed to move energy, goods, and capital more efficiently between India, the Middle East and Europe, thereby deepening economic integration and shared prosperity.

Linking continents, cultures, and markets, IMEC establishes a dynamic framework for economic growth and wealth creation. Envisioned as a vital artery of global trade, the corridor connects regions that collectively represent 40 percent of the world’s population and 50 percent of global GDP.  Secure, reliable, and affordable energy flows to and from IMEC partners serve as the fundamental lifeblood for economic growth across the globe.

IMEC partners currently dominate global energy markets, accounting for more than one‑third of world trade in crude oil and petroleum products. In the financial year ending March 2025, they supplied 27 percent of India’s crude oil imports, underlining the corridor’s importance for India’s growth and energy security.

The energy flows that underpin IMEC will remain dominated by conventional fuels as they continue to outperform alternatives on reliability, affordability, and security. 

In the near term, the energy flows that underpin IMEC will remain dominated by conventional fuels as they continue to outperform alternatives on reliability, affordability, and security. The corridor, therefore, builds on existing supply chains—pipelines, tanker fleets, and port and logistics infrastructure—that have demonstrated resilience amid repeated episodes of global volatility.

India’s rapidly growing demand for energy, combined with plans for two new greenfield refineries that will expand refined product export capacity, makes it a natural anchor for long‑term energy partnerships through IMEC. These investments will not only meet domestic needs but also position India as a significant exporter to IMEC markets, reinforcing its role as the largest foreseeable growth market for energy.

Over the longer term, IMEC is expected to attract hundreds of billions of dollars in investment, creating high‑value jobs and ushering prosperity across partner regions. However, mobilising this capital at scale will require a blend of private investment and substantial public funding to de‑risk projects and accelerate the development of a future‑ready low‑emission energy network.

Plans to increase low‑emission energy flows are advancing, but their success hinges critically on affordability: without incentives to reduce production costs and offtake guarantees to secure demand, low‑emission energy will struggle to compete, and adoption is likely to fall short of expectations, especially in the Global South. Initiatives to build transcontinental electricity transmission—especially cooperation among the UAE, Saudi Arabia, and India—aim to create integrated power pools that can trade electricity across borders and time zones.

Plans to increase low‑emission energy flows are advancing, but their success hinges critically on affordability: without incentives to reduce production costs and offtake guarantees to secure demand, low‑emission energy will struggle to compete, and adoption is likely to fall short of expectations, especially in the Global South.

Shared grids will allow IMEC countries to meet demand with the least‑cost mix of conventional and low‑emission energy. Most of the least expensive low-emission energy production sites are located in India, Saudi Arabia, and the UAE, helping reduce electricity costs. Integrated grids across different time zones will allow for round-the-clock availability of both conventional and low-emission electricity. These efficiencies will reduce low-emission energy costs for millions of consumers.

IMEC also envisions large-scale trade in conventional and low-emission hydrogen from low-cost production hubs in India and the Middle East to European markets. Both India and Middle Eastern partners possess abundant low‑emission energy resources at strategic locations and are setting ambitious hydrogen production targets that could make them major global suppliers.

The European Union’s commitment to import low‑emission hydrogen by 2030 sends an important long‑term demand signal but is complicated by the EU’s Carbon Border Adjustment Mechanism (CBAM). CBAM is a discriminatory trade barrier masked as an environmental policy, which risks raising costs and slowing the low‑emission energy flows that IMEC seeks to expand.

India has set a 2070 net‑zero emissions target, reflecting its developmental priorities and differing capacities relative to the Global North, despite diplomatic pressure for a 2050 alignment. CBAM will shift the burden of emissions reduction onto the Global South, potentially delaying net‑zero achievement not only for India but for other developing economies as well.

CBAM is a discriminatory trade barrier masked as an environmental policy, which risks raising costs and slowing the low‑emission energy flows that IMEC seeks to expand.

CBAM conflicts with the UNFCCC principle of “common but differentiated responsibilities,” which assigns a greater share of emissions reduction obligations to advanced economies. Many products exported from India have higher embedded emissions than EU benchmarks, which under the Carbon Border Adjustment Mechanism (CBAM) would translate into higher import tariffs linked to EU Emissions Trading System (ETS) carbon prices—eroding competitiveness and constraining trade diversification.

Such auction‑based carbon pricing at the border risks creating trade friction, suppressing growth in partner countries, and undermining IMEC’s core objective of enhanced connectivity and economic integration. IMEC partners should prioritise aligning trade and energy policies, including coordinated efforts to defer the application of CBAM to energy trade within the corridor.

IMEC partners should prioritise aligning trade and energy policies, including coordinated efforts to defer the application of CBAM to energy trade within the corridor.

A more constructive approach would redirect CBAM‑linked revenues into technology transfer and measures that improve the affordability of low‑emission technologies in the Global South. This reorientation would support a fairer, more inclusive transition, ensuring that IMEC fulfils its promise as a corridor of shared prosperity powered by secure, affordable, and low-emission energy.

This commentary originally appeared in Observer Research Foundation.

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