World Bank greenlights $1.5B for India’s clean energy initiative.

By Oliver Townsend Jul 1, 2024
World Bank Approves $1.5 Billion to Boost India’s Low-Carbon Energy Development.pngOrginal image from:

The World Bank has approved $1.5 billion in financing to accelerate the development of low-carbon energy in India. This funding aims to promote the growth of a green hydrogen market, expand renewable energy, and facilitate investments in low-carbon energy projects. As India experiences rapid economic growth, it is essential to decouple this growth from emissions. This requires a significant increase in renewable energy adoption, particularly in challenging industrial sectors. The development of green hydrogen and climate finance are crucial steps towards achieving this goal.

India’s Economic Growth and Low-Carbon Transition

India is the fastest-growing large economy globally, necessitating the need to separate economic growth from emissions growth. To achieve this, a substantial increase in renewable energy production is essential, especially in hard-to-abate industrial sectors. The expansion of green hydrogen production and consumption, along with the mobilization of investments for low-carbon initiatives, are critical components of India’s low-carbon transition.

Second Low-Carbon Energy Programmatic Development Policy Operation

The Second Low-Carbon Energy Programmatic Development Policy Operation focuses on supporting reforms to boost green hydrogen production and electrolyzer technologies. By incentivizing battery energy storage solutions and improving renewable energy integration into the grid, this operation aims to enhance renewable energy penetration in India. Additionally, it supports the development of a national carbon credit market to encourage low-carbon investments.

Support for India’s Low-Carbon Strategy

The World Bank is committed to supporting India’s low-carbon development strategy to achieve its net-zero target. By focusing on private investment in green hydrogen and renewable energy, these operations aim to create clean energy jobs in the private sector. The reforms supported by this funding are projected to significantly increase green hydrogen production, electrolyzer capacity, renewable energy installations, and emissions reductions in India.

Projected Outcomes

The financing from the World Bank is expected to result in the production of 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually from FY25/26 onwards. This initiative will also lead to a substantial increase in renewable energy capacity, emissions reductions, and the development of a national carbon credit market. By scaling up investments in green hydrogen and renewable energy infrastructure, India is progressing towards achieving its Nationally Determined Contributions targets.

Financing Details

The financing for this operation includes 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). This funding aligns with the Government of India’s energy security objectives and the World Bank’s Hydrogen for Development (H4D) Partnership.

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