The World Bank has recently approved an additional $1.5 billion in funding to support India’s transition towards low-carbon energy. This funding aims to expedite the development of low-carbon energy in the country and forms part of the World Bank’s commitment to assisting India in achieving its net-zero target, while also creating clean energy jobs in the private sector.
As the fastest-growing large economy in the world, India is experiencing ongoing rapid expansion. The challenge lies in decoupling economic growth from emissions growth, which will necessitate a significant scaling up of renewable energy, particularly in challenging industrial sectors. To address this, the operation will concentrate on promoting the development of a robust market for green hydrogen, increasing the scale of renewable energy, and mobilising finance for low-carbon energy investments.
The Second Low-Carbon Energy Programmatic Development Policy Operation, the second in a series of two operations, will support reforms to increase the production of green hydrogen and electrolyzers, critical technology required for green hydrogen production. It will also focus on increasing the penetration of renewable energy, incentivising battery energy storage solutions, and improving the integration of renewable energy into the grid through amendments to the Indian Electricity Grid Code.
According to Auguste Tano Kouame, the World Bank Country Director for India, both the first and second operations will strongly emphasise boosting private investment in green hydrogen and renewable energy. The reforms supported by the funding are anticipated to result in the production of 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 is also aligned with the Government of India’s energy security and with the Bank’s Hydrogen for Development (H4D) Partnership. The funding 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).
This initiative has received positive feedback from the team leaders for the operation, Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, who stated that it is helping to scale up investments in green hydrogen and renewable energy infrastructure, contributing towards India’s journey to achieving its Nationally Determined Contributions targets.
Overall, this funding from the World Bank will play a crucial role in India’s low-carbon transition, supporting the development of green hydrogen and renewable energy while creating opportunities for private sector investment and clean energy job creation. With India’s ambitious targets for renewable energy and emissions reduction, this support comes at a pivotal time for the country’s sustainable development goals.