WASHINGTON, June 28, 2024 – The World Bank Board of Directors today approved $1.5 billion in financing for a second operation to help India accelerate low-carbon energy development. The operation will aim to promote the development of a vibrant green hydrogen market, further scale up renewable energy and boost financing for low-carbon energy investments.
India is the fastest growing major economy in the world and the economy is expected to continue growing at a rapid pace. Decoupling economic growth from emissions growth will require scaling up renewable energy, especially in hard-to-abate industrial sectors. This in turn will require expanding green hydrogen production and consumption, as well as accelerating the development of climate finance to stimulate the mobilization of finance for low-carbon investments.
The Second policy operation for programmatic development in the field of low-carbon energy – the second in a series of two operations of similar size – will support reforms to boost the production of green hydrogen and electrolyzers, crucial technology needed for green hydrogen production. The operation also supports reforms to boost renewable energy penetration, for example by boosting battery energy storage solutions and amending India’s Electricity Grid Code to improve the integration of renewable energy into the electricity grid. In June 2023, the World Bank approved the $1.5 billion First policy operation for programmatic development in the field of low-carbon energy which supported the exemption of transmission costs for renewable energy in green hydrogen projects, the issuance of a clear path to launch 50 GW of renewable energy tenders annually and the creation of 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. “Indeed, both the first and second operations are strongly focused on stimulating private investments in green hydrogen and renewable energy.”
The reforms supported by the operation are expected to result in the production of at least 450,000 tonnes of green hydrogen and 1,500 MW of electrolyzers per year from financial year 25/26. Moreover, it will also contribute significantly to increasing renewable energy capacity and support a reduction of emissions by 50 million tons per year. The operation will also support steps to further develop a national carbon credit market.
“India has taken bold action to develop a domestic market for green hydrogen, supported by rapidly growing renewable energy capacity. The first tenders under the National Green Hydrogen Mission incentive program have shown significant interest from the private sector,” said Aurélien Kruse, Xiaodong Wang and Surbhi Goyal, team leaders for the operation. “The operation will help scale up investments in green hydrogen and renewable energy infrastructure. This will contribute to India’s journey towards achieving its Nationally Determined Contribution targets.”
This operation is aligned with the energy security of the Government of India and that of the Bank Hydrogen for Development Partnership (H4D)..
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).
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