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.
• In the short-term, the composition of energy flows between IMEC partners will be dominated by conventional energy sources which are unmatched in terms of reliability, affordability and security.
• 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.
• In the long-term, IMEC will attract hundreds of billions of dollars in large-scale investment, creating high-value jobs and unmatched prosperity in the region. While private investment will initiate projects, generous supplement from public funds will be required to reduce geopolitical risks and accelerate the construction of a future-ready energy network.
• 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.
• Initiatives to enable transcontinental electricity transmission, as envisioned by IMEC are advancing with notable momentum. UAE, Saudi Arabia, and India are working together towards the ambition of transforming regional energy trade and accelerating the integration of electricity grids across borders. IMEC partners are harmonising policies and regulatory standards to ensure technical interoperability.
• 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.
• By optimising resource use across time zones, shared electricity grids between IMEC partners will make conventional and low emission electricity available round-the-clock, reducing costs for millions of consumers.
• 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.
• The EU’s commitment to importing low emission hydrogen by 2030 provides a strong demand signal, but production will be curtailed by the EU’s Carbon Border Adjustment Mechanism (CBAM), a discriminatory trade barrier disguised as an environmental measure, as pointed out by India.
• 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.
• The implementation of CBAM contravenes the UNFCCC principle of “common but differentiated responsibilities,” which allocates a greater burden of emissions reduction to the Global North—a concern prominently raised by India, one of the largest members of the Global South.
• 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).
• By subjecting imports to auction-based carbon pricing equivalent to the EU ETS, CBAM will introduce an economic disincentive for trade diversification, potentially leading to trade friction and impeding economic growth in partner nations. This mechanism fundamentally contradicts the central tenet of the IMEC initiative, which is predicated on fostering enhanced multilateral connectivity and economic integration through trade and infrastructure development. The resulting competitive disadvantage could undermine the strategic geopolitical and economic objectives of the IMEC corridor.
• 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.
• Redirecting CBAM funds towards technology transfer and improving affordability of low emission technologies in the Global South is essential to ensuring that the transition towards low emission energy sources is fair and inclusive.

Read the report here.

All views expressed in this publication are solely those of the authors, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

• Energy
• Energy Security
• European Union
• India
• Middle East
• imec
• IMEC Corridor
• imec initiative
• imec partners
• India Middle East Europe Economic Corridor
• multi modal connectivity projects
• transcontinental trade corridor

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