World Bank approves $1.5 billion loan to support India’s low-carbon energy projects

The World Bank has given the green light to provide $1.5 billion in financing to accelerate India’s progress toward low-carbon energy. The funding marks the second phase of support, aimed at supporting a strong green hydrogen market, expanding renewable energy capacity and catalyzing investment in low-carbon energy initiatives, according to a statement from the World Bank.

“It said India, the world’s fastest-growing major economy, is expected to continue its rapid expansion. Achieving the decoupling of economic growth from growth in emissions will require scaling up the use of renewable energy, particularly in demanding industrial sectors,” the statement said.

The World Bank has approved $1.5 billion in financing to help India accelerate its low-carbon energy development, including boosting green hydrogen production, increasing climate finance and supporting reforms in key technologies such as electrolysers.

This operation follows on from a similar-scale initiative in June 2023 that facilitated renewable energy transmission fee waivers and established a framework for large-scale renewable energy tenders as well as a national carbon credit market.

The operation also includes reforms to increase renewable energy penetration. This includes encouraging battery energy storage solutions and amending India’s electricity grid code to increase the integration of renewable energy into the grid, the World Bank said.

World Bank Country Director for India, Auguste Tano Kouame, expressed satisfaction with continued support for India’s low-carbon development strategy. He stressed that the strategy aims to help India achieve its net zero emissions target while supporting clean energy job creation in the private sector. According to Kouame, both the first and second operations emphasize increasing private investment in green hydrogen and renewable energy.

The reforms facilitated by this operation are expected to lead to annual production of at least 450,000 tonnes of green hydrogen and 1,500 MW of electrolysers starting in fiscal year 2025-26.

In addition, these initiatives are expected to significantly boost renewable energy potential and contribute to reducing emissions by 50 million tons per year, according to the statement. The operation will also support the development of a domestic carbon credit market.

Aurélien Kruse, Xiaodong Wang and Surbhi Goyal, team leaders responsible for the operation, highlighted India’s progress in developing the domestic green hydrogen market while increasing renewable energy generation capacity. They noted great interest from the private sector in the first tenders under the National Green Hydrogen Mission incentive program. The operation aims to scale up investment in green hydrogen and renewable energy infrastructure, supporting India’s efforts to achieve nationally determined contribution targets.

The operation is in line with India’s energy security goals and the World Bank’s Hydrogen for Development (H4D) partnership. Financing for the operation 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).

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