World Bank approves $1.5 billion to accelerate low-carbon energy development in India

The World Bank has approved $1.5 billion in financing to support India’s efforts to develop low-carbon energy.

This initiative, which is part of the second action under the low-carbon energy programmatic policy, aims to support a robust green hydrogen market, develop renewable energy and stimulate investment in low-carbon energy.

The World Bank has said that to decouple economic growth from emissions, India needs to scale up renewable energy, especially in industrial sectors that are difficult to decarbonize.

This involves a significant increase in the production and consumption of green hydrogen and the accelerated development of climate finance to support low-emission investments.

The second operation under the programmatic low-emission energy development policy is the second in a series, and each of them is worth USD 1.5 billion. This financing will support reforms to improve the production of green hydrogen and electrolysers.

It also promotes renewable energy integration by encouraging battery storage and amending the Indian Electricity Grid Code to better integrate renewable energy.

The initiative is in line with the Government of India’s energy security efforts and the World Bank’s Hydrogen Partnership for Development. The financing includes a $1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $31.5 million loan from the International Development Association (IDA).

In June 2023, the World Bank approved the first policy action that eliminated renewable energy transmission fees for green hydrogen projects, established a path for 50 GW per year of renewable energy tenders, and established a legal framework for a domestic 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 emissions goal while creating clean energy jobs in the private sector,” said Auguste Tano Kouame, World Bank Country Director for India.

The reforms supported by this operation are expected to produce at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers per year, starting in fiscal year 2025–2026.

Additionally, it is expected to significantly increase renewable energy capacity and reduce emissions by 50 million tons per year. This operation will also accelerate the development of the domestic carbon credit market.

The initiative is in line with the Government of India’s energy security and World Bank Hydrogen for Development (H4D) partnership. The financing 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 World Bank also approved a $200 million loan to the Himachal Pradesh government to help the state achieve its target of adding 10 GW of additional renewable energy capacity and implementing power sector reforms.