On the 29th of June, the Board of Executive Directors of the World Bank approved $1.5 billion in financing to India. Its aim is to accelerate India’s development of low-carbon energy. It will help India promote low-carbon energy in three separate ways.
First, with more finance at its disposal, India will scale up and accelerate the pace with which it is increasing its share of renewable energy. Further, it will help boost the development of green hydrogen within the country. Lastly, the fund will help India to stimulate climate finance for low-carbon energy investments.
As per World Bank, the International Bank for Reconstruction and Development (IBRD) will grant this $1.44 billion loan. It is facilitated by the United Kingdom’s $1 billion assurance.
Another $56.57 million credit comes from the International Development Association (IDA). Apparently, this is from a recommitment of canceled IDA credit balances.
Currently, India’s energy consumption per capita is said to be around one-third of the global average. However, the energy demand is expected to increase sharply as the Indian economy expands rapidly. Notably, the Indian economy is one of the fastest-growing major economies in the world, so the energy demand has to be in sync with that.
However, this expected increase in energy demand comes against the backdrop that the nation is aiming to phase out fossil-based energy sources. This is in line with India’s stated aim to achieve net-zero carbon emissions by 2070.
This is why Green hydrogen is expected to play a major role in India’s low-carbon transition. It is claimed that Green Hydrogen can help decarbonise fertilizer and refinery industries which are considered carbon-intensive industries. It can also transform heavy industries including iron and steel.
The First Operation launched by World Bank to support India’s low-carbon transition
As per reports, the World Bank has envisaged a series of two operations. The First Low-Carbon Energy Programmatic Development Policy Operation will aid India in developing green hydrogen. This operation is aligned with the World Bank’s Hydrogen for Development (H4D) Partnership launched at CoP27.
World Bank’s Country Director for India, Auguste Tano Kouame said, “The program will support the successful implementation of the National Green Hydrogen Mission that aims to stimulate $100 billion in private sector investment by 2030.”
He added, “The World Bank remains committed to supporting India’s low-carbon transition by complementing public financing and enabling private sector investments.”
The program wants to expand the renewable energy supply which will reduce cost and improve grid integration. Further, this will help India to reach its target of 500 GW of renewable energy capacity by 2030.
For achieving this aim, the Indian government has planned to issue bids for 50 GW of renewable energy each year starting from FY23-24 to FY27-28. As per reports, this will help reduce carbon emissions by 40 million tons per annum by the year 2026.
The program will help establish a national carbon credit trading scheme and launch a national carbon market. It is important to note that a national carbon market tries to create a level-playing field between low-carbon energy and fossil fuels.
Further, the program will also support efforts to issue $6 billion in green bonds by 2026.
Earlier, in January 2023, India issued its first sovereign green bond.
Apart from approving the finance, the World Bank noted India’s impressive progress in renewable energy installed capacity.
