The World Bank's Board of Executive Directors has sanctioned $1.5 billion in funding to support India's efforts in advancing low-carbon energy. This financing marks the second phase of a series aimed at fostering a robust green hydrogen market, expanding renewable energy sources, and encouraging investments in low-carbon energy projects.
India, recognized as the world's fastest-growing large economy, is projected to sustain its rapid economic expansion. To ensure this growth does not exacerbate carbon emissions, a significant increase in renewable energy is essential, particularly in challenging industrial sectors. Achieving this goal necessitates boosting green hydrogen production and consumption, alongside accelerating climate finance to drive low-carbon investments.
The Second Low-Carbon Energy Programmatic Development Policy Operation is the latest in a series of similar initiatives. This operation aims to implement reforms that will enhance green hydrogen and electrolyzer production, vital for green hydrogen generation. Additionally, it will promote renewable energy integration by encouraging battery energy storage solutions and updating the Indian Electricity Grid Code to better accommodate renewable sources.
This builds on the success of the first $1.5 billion operation approved by the World Bank in June 2023, which facilitated renewable energy transmission charge waivers for green hydrogen projects, set a course for 50 GW of annual renewable energy tenders, and established a legal framework for a national carbon credit market.
“The World Bank is delighted to continue its support for India’s low-carbon development strategy, which aims to achieve net-zero emissions while creating clean energy jobs in the private sector," stated Auguste Tano Kouame, World Bank Country Director for India. "Both operations are crucial for boosting private investment in green hydrogen and renewable energy."
The anticipated outcomes of these reforms include the production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually from FY25/26. Moreover, the initiative is expected to substantially increase renewable energy capacity and cut emissions by 50 million tons annually. It will also support further development of a national carbon credit market.
"India has made significant strides in developing a domestic green hydrogen market, supported by expanding renewable energy capacity," noted Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, Team Leaders for the operation. "This operation is pivotal in scaling up investments in green hydrogen and renewable energy infrastructure, contributing to India’s Nationally Determined Contributions targets."
This operation aligns with India's energy security goals and the World Bank's Hydrogen for Development (H4D) Partnership. The financing comprises a $1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $31.5 million credit from the International Development Association (IDA).
