Beyond Trade: CEPA as a platform for climate-aligned economic cooperation

 

 

 

 

 

 

 

 

 

 

By Pallavi Atre, Consulting Partner (ESG and Climate [Data and Disclosures]), Global Sustainability Services; and Hemakiran Gupta Kuralla (Kiran), Global Head – Sustainability Services Practice, Tata Consultancy Services

When India and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA) in 2022, it was framed as a fast-track trade deal. Three years later, it is clear that CEPA is doing something more consequential: quietly underwriting one of the most significant climate-aligned partnerships in the Global South.

This matters because global climate cooperation is struggling. Climate finance remains debated, carbon markets are fragmented, and trust between developed and developing economies is thin. Against this backdrop, the India-UAE CEPA offers a pragmatic alternative – climate action driven by capital, scale and mutual economic interest.

Trade as climate infrastructure 

CEPA does not contain a standalone environment chapter, but that is precisely its strength. Instead of aspirational language, it embeds sustainability through investment flows, energy cooperation and industrial scale‑up. Since the agreement entered into force in May 2022, bilateral trade has nearly doubled to over $80 billion, creating the confidence needed for long‑term infrastructure and clean‑energy bets.

Trade volume is not incidental to climate outcomes. Decarbonisation requires scale, and CEPA provides it.

Clean energy backed by capital 

The most tangible climate impact of CEPA lies in the energy transition. The UAE has committed to developing over 6.6 GW of clean energy capacity in India, financed in part through its $30 billion Alterra climate investment platform, announced around COP28. In parallel, India and the UAE have signed frameworks enabling up to 60 GW of renewable energy investments, spanning solar, wind and storage.

These are not symbolic numbers. India targets 500 GW of non-fossil capacity by 2030 and net zero by 2070 – an effort estimated to require over $10 trillion in cumulative investment. CEPA-enabled UAE capital reduces risk and accelerates deployment at precisely the scale India needs.

Green hydrogen and the next energy trade 

CEPA is also shaping the future of energy trade. India and the UAE are actively collaborating on green hydrogen, combining India’s low‑cost renewable potential with the UAE’s port infrastructure, shipping capacity and energy‑trading expertise.

This cooperation arrives at a critical moment when global standards and offtake arrangements for hydrogen are still being defined. By moving early, India and the UAE are not just participants in the hydrogen economy; they are potential rule shapers.

Perhaps CEPA’s most underappreciated contribution is its model of climate finance without conditionality. UAE investments in Indian renewables, grid infrastructure, food parks and clean manufacturing are commercially driven yet climate aligned. This contrasts sharply with the slow and contested climate finance flows from developed economies.

For the Global South, the lesson is powerful: predictable trade rules and investment protection can mobilise climate capital at scale, often faster than multilateral climate funds.

A template worth replicating 

The India-UAE CEPA is not branded as a climate agreement, yet it may be doing more for decarbonisation than many that are. By aligning trade, investment and energy transition, it demonstrates how economic self‑interest can function as climate infrastructure. In a fractured global order, such pragmatic, incentive‑driven partnerships may be the most realistic path forward.