World Bank Agrees to $1.5 Billion Loan to Boost India's Green Hydrogen Initiative

A $1.5 billion loan from the World Bank has been granted to assist India in accelerating the development of low-carbon energy. 
According to a statement released on Friday, the money will be used to support the development of the green hydrogen market, electrolysers, and higher penetration rates of renewable energy.

This is the World Bank's second funding round for India's efforts to promote green energy.

To expedite India's low-carbon energy development, the World Bank approved the $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation in June 2023. 

With the additional investment, India will be able to increase its production and consumption of green hydrogen and accelerate the growth of climate finance. According to the global financing organization, this will increase the amount of money raised for low-carbon developments. 

According to a statement from the World Bank, "the Second Low-Carbon Energy Programmatic Development Policy Operation—the second of two operations of a similar size—will support reforms to boost the production of green hydrogen and electrolysers, critical technology needed for green hydrogen production." 

The development takes place against the backdrop of India's aggressive ambitions for energy transition. By 2030, the Center wants to have 500 GW of installed renewable energy capacity, and by 2070, it wants to be net zero. In addition, the Center started the ₹17,000-crore National Green Hydrogen Mission to support the production of green hydrogen and electrolysers.

The operation also backs measures aimed at increasing the use of renewable energy. The World Bank stated that one way to enhance the integration of renewable energy into the grid is to modify the Indian Electricity Grid Code and provide incentives for battery energy storage technologies. 

The $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation was approved by the World Bank in June 2023. This backed the issue of a clear roadmap for the yearly launch of 50 GW of renewable energy tenders, the waiver of transmission costs for renewable energy in green hydrogen projects, and the establishment of a regulatory framework for a national carbon credit market.

Auguste Tano Kouame, the World Bank Country Director for India, stated in a public statement: "The World Bank is pleased to continue supporting India's low-carbon development strategy which will help the country achieve its net-zero target while creating clean energy jobs in the private sector." 

"In fact, increasing private investment in green hydrogen and renewable energy is a major focus of both the first and second operations," Kouame continued.
From FY25–26 onward, the operation-supported improvements are anticipated to produce at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolysers annually. 

Furthermore, it will play a major role in supporting the reduction of emissions by 50 million tonnes annually and increasing the capacity of renewable energy sources. 

Additionally, the operation will assist with efforts to expand the country's carbon credit market. 
"India has acted decisively to create a homegrown green hydrogen market, supported by a steadily growing capacity for renewable energy. The National Green Hydrogen Mission's Team Leaders, Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, stated that the first tenders under the incentive program had shown a great deal of interest from the private sector.

"The operation is assisting in increasing investments in infrastructure for renewable energy sources and green hydrogen. This would help India reach its targets for Nationally Determined Contributions," Goyal continued.
This initiative is in line with the Bank's Hydrogen for Development (H4D) cooperation and the energy security of the Government of India. 
The International Development Association (IDA) has provided $31.5 million in credit while the International Bank for Reconstruction and Development (IBRD) has loaned $1.46 billion to fund the operation.