The World Bank has granted a $1.5 billion loan to support India’s accelerated growth in low-carbon energy. The funds will be utilized to advance the market for green hydrogen, electrolysers, and increase the penetration of renewable energy in the country.
This funding marks the second round from the World Bank directed towards India’s green energy initiatives. In June 2023, the World Bank approved the $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation, which aimed to expedite India’s low-carbon energy development.
The recent funding will be instrumental in expanding India’s green hydrogen production and consumption. It will also facilitate the swift development of climate finance, aiding in the mobilization of funds for low-carbon investments.
To enhance India’s green hydrogen production, the Second Low-Carbon Energy Programmatic Development Policy Operation will support reforms and the critical technology required for green hydrogen production – electrolysers.
India has set ambitious targets for energy transition, aiming to achieve 500 GW of installed renewable energy capacity by 2030 and to reach net-zero emissions by 2070. In alignment with these targets, the Centre introduced the National Green Hydrogen Mission, a ₹17,000-crore initiative to promote the manufacturing of electrolysers and green hydrogen.
The operation funded by the World Bank will also stimulate renewable energy penetration in India by incentivizing battery energy storage solutions and amending the Indian Electricity Grid Code to facilitate the integration of renewable energy into the grid.
The impact of these reforms is projected to include the production of 450,000 metric tonnes of green hydrogen and 1,500 MW of electrolysers annually starting from the fiscal year 2025-26. Moreover, it will significantly contribute to the increase of renewable energy capacity and a reduction in emissions by 50 million tonnes per year.
By supporting India’s low-carbon development strategy, the World Bank aims to help the country achieve its net-zero target while fostering job creation in the private clean energy sector. The operation will also aid in the development of a national carbon credit market.
This initiative is in line with India’s energy security objectives and the Bank’s Hydrogen for Development (H4D) partnership.
The financing for this 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). The World Bank’s continued support emphasizes its commitment to India’s sustainable growth and transition to a low-carbon economy.
FAQ Section:
1. What is the purpose of the $1.5 billion loan granted by the World Bank to India?
The purpose of the loan is to support India’s accelerated growth in low-carbon energy, specifically to advance the market for green hydrogen, electrolysers, and increase the penetration of renewable energy in the country.
2. Is this the first time that the World Bank has provided funding for India’s green energy initiatives?
No, this funding marks the second round of support from the World Bank for India’s green energy initiatives. In June 2023, the World Bank approved the $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation aimed at expediting India’s low-carbon energy development.
3. How will the funding support India’s green hydrogen production?
The funding will support reforms and critical technology required for green hydrogen production, particularly electrolysers. It will also facilitate the development of climate finance to mobilize funds for low-carbon investments.
4. What are India’s energy transition targets?
India aims to achieve 500 GW of installed renewable energy capacity by 2030 and reach net-zero emissions by 2070.
5. What is the National Green Hydrogen Mission?
The National Green Hydrogen Mission is a ₹17,000-crore initiative introduced by the Indian government to promote the manufacturing of electrolysers and green hydrogen.
6. How will the funding stimulate renewable energy penetration in India?
The funding will incentivize battery energy storage solutions and amend the Indian Electricity Grid Code to facilitate the integration of renewable energy into the grid.
7. What impact are these reforms projected to have?
The reforms are projected to include the production of 450,000 metric tonnes of green hydrogen and 1,500 MW of electrolysers annually starting from the fiscal year 2025-26. It will also contribute to the increase of renewable energy capacity and a reduction in emissions by 50 million tonnes per year.
8. What is the World Bank’s objective in supporting India’s low-carbon development strategy?
The World Bank aims to help India achieve its net-zero target while fostering job creation in the private clean energy sector. The operation will also aid in the development of a national carbon credit market.
9. What is the financing structure for this operation?
The financing for this 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).
10. What does the World Bank’s continued support emphasize?
The World Bank’s continued support emphasizes its commitment to India’s sustainable growth and transition to a low-carbon economy.
Definitions:
1. Green hydrogen: Hydrogen produced using renewable energy sources, with minimal carbon emissions.
2. Electrolysers: Devices that use electricity to split water into hydrogen and oxygen, used in the production of green hydrogen.
3. Renewable energy: Energy that is generated from renewable sources such as sunlight, wind, or hydro power, which are naturally replenished.
4. Net-zero emissions: Achieving a balance between the amount of greenhouse gases emitted and the amount removed from the atmosphere, resulting in no net increase in emissions.
5. National Green Hydrogen Mission: An initiative introduced by the Indian government to promote the manufacturing of electrolysers and green hydrogen.
6. Carbon credit market: A system in which organizations or countries can trade carbon credits, representing the reduction of greenhouse gas emissions, as a way to incentivize emissions reduction efforts.
Suggested Related Links:
1. World Bank Official Website
2. World Bank Press Releases
3. Cutting Emissions while Powering Recovery and Growth