The World Bank’s Board of Executive Directors has approved $1.5 billion in financing to support India’s transition to low-carbon energy. The operation aims to develop a market for green hydrogen, scale up renewable energy, and stimulate finance for low-carbon investments.
India's rapid economic growth necessitates decoupling from emissions growth by expanding renewable energy, particularly in industrial sectors. This requires increased production and consumption of green hydrogen and the development of climate finance.
The Second Low-Carbon Energy Programmatic Development Policy Operation will support reforms to enhance green hydrogen production and the use of electrolyzers. It also aims to boost renewable energy through battery storage solutions and amendments to the Indian Electricity Grid Code. In June 2023, the World Bank approved a similar $1.5 billion operation that supported transmission charge waivers for renewable energy in green hydrogen projects, outlined plans for 50 GW of annual renewable energy tenders, and established 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 have a strong focus on boosting private investment in green hydrogen and renewable energy.”
The reforms are expected to produce at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers per year starting FY25/26. They will also increase renewable energy capacity and reduce emissions by 50 million tons annually while further developing 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 demonstrated significant private sector interest,” said Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, Team Leaders for the operation. “The operation is helping in scaling up investments in green hydrogen and in renewable energy infrastructure. This will contribute towards India’s journey for achieving its Nationally Determined Contributions targets.”
This initiative aligns with India's energy security goals and the World Bank’s 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).