World Bank Approves $1.5 Billion to Accelerate India’s Low-Carbon Energy Development
Image Credits: OpIndia
July 1, 2024 – The World Bank’s Board of Executive Directors has approved $1.5 billion in financing for a second operation aimed at accelerating the development of low-carbon energy in India. This operation is part of the ongoing effort to foster a vibrant market for green hydrogen, scale up renewable energy, and stimulate finance for low-carbon energy investments.
India, recognized as the fastest-growing large economy globally, is set to decouple its economic growth from emissions growth. This requires significant scaling up of renewable energy, particularly in hard-to-abate industrial sectors. The initiative will promote the expansion of green hydrogen production and consumption while fostering the development of climate finance to boost low-carbon investments.
The Second Low-Carbon Energy Programmatic Development Policy Operation, the second of two similarly sized operations, aims to support reforms that enhance green hydrogen and electrolyser production. The operation will also boost renewable energy penetration by incentivising battery energy storage solutions and amending the Indian Electricity Grid Code to improve renewable energy integration into the grid.
In June 2023, the World Bank approved the first $1.5 billion operation, which facilitated the waiver of transmission charges for renewable energy in green hydrogen projects, set a clear path for 50 GW of renewable energy tenders annually, and created a legal framework for a national carbon credit market.
“The World Bank is pleased to continue supporting India’s low-carbon development strategy, which will help achieve the country’s net-zero target while creating clean energy jobs in the private sector,” said Auguste Tano Kouame, World Bank Country Director for India. “Both the first and second operations focus on boosting private investment in green hydrogen and renewable energy.”
The reforms supported by the new operation are projected to produce at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers per year from FY25/26 onwards. Additionally, it will significantly increase renewable energy capacity and support reductions in emissions by 50 million tons per year. The operation will also help develop a national carbon credit market.
“India has taken bold action to develop a domestic market for green hydrogen, underpinned by rapidly expanding renewable energy capacity. The first tenders under the National Green Hydrogen Mission’s incentive scheme have shown significant private sector interest,” said Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, Team Leaders for the operation. “This operation is crucial for scaling up investments in green hydrogen and renewable energy infrastructure, contributing to India’s Nationally Determined Contributions targets.”
The financing for the 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).
The plan aligns with the Government of India’s energy security goals and the World Bank’s Hydrogen for Development (H4D) Partnership, reinforcing India’s commitment to a sustainable and resilient energy future.
Also Read: World Bank Approves Additional $1.5 Billion in Financing to Support India’s Low-Carbon Transition
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