World Bank Approves USD 1.5 bn Loan To Support India's Green Hydrogen Push
World Bank Approves USD 1.5 bn Loan To Support India's Green Hydrogen Push
In order to promote a market for green hydrogen, electrolysers, and increased renewable energy penetration, the World Bank has approved a USD 1.5 billion loan to help India accelerate its low-carbon energy development.
This is the second round of funding from the World Bank towards India's green energy push.
In June 2023, the World Bank approved the USD 1.5-billion First Low-Carbon Energy Programmatic Development Policy Operation to accelerate India's development of low-carbon energy.
The fresh funding will help India expand green hydrogen production and consumption as well as for a faster development of climate finance. This will boost the mobilisation of finance for low-carbon investments, according to the multilateral financing agency.
"The Second Low-Carbon Energy Programmatic Development Policy Operation – the second in a series of two operations similar in size – will support reforms to boost the production of green hydrogen and electrolysers, critical technology needed for green hydrogen production," the World Bank said in a statement.
The development comes in the backdrop of India's ambitious energy transition targets. The Centre has set a target of achieving 500 GW of installed renewable energy capacity by 2030 and reaching net zero by 2070. Further, the Centre also launched the ₹17,000-crore National Green Hydrogen Mission to promote manufacturing of electrolysers and green hydrogen.
The operation also supports reforms to boost renewable energy penetration. For instance, by incentivising battery energy storage solutions and amending the Indian Electricity Grid Code to improve renewable energy integration into the grid, the World Bank said.
In June 2023, the World Bank approved the $1.5-billion First Low-Carbon Energy Programmatic Development Policy Operation. This supported the waiver of transmission charges for renewable energy in green hydrogen projects, the issuance of a clear path to launch 50 GW of renewable energy tenders annually and creating 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," Auguste Tano Kouame, World Bank Country Director for India, said in a public statement.
"Indeed, both the first and second operations have a strong focus on boosting private investment in green hydrogen and renewable energy," Kouame added.
The reforms supported by the operation are expected to result in the production of at least 450,000 metric tonnes of green hydrogen and 1,500 MW of electrolysers per year from FY25-26 onwards.
In addition, it will also significantly help to increase renewable energy capacity and support reduction in emissions by 50 million tonnes 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, 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," Goyal added
This operation is aligned with the Government of India's energy security and the Bank's Hydrogen for Development (H4D) partnership.
The 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).