A $1.5 billion loan from the World Bank will support India’s Green Hydrogen Initiative.

A $1.5 billion loan from the World Bank has been approved to support India’s efforts to accelerate the development of low-carbon energy, with a primary focus on green hydrogen. According to a statement issued on Friday, the financing is intended to promote a healthy market for green hydrogen, electrolysers, and increased penetration of renewable energy sources. This represents the second stage of World Bank funding for India’s renewable energy projects.

To hasten India’s shift to low-carbon energy, the World Bank has already authorized a $1.5 billion loan in June 2023 under the First Low-Carbon Energy Programmatic Development Policy Operation. The most recent investment will hasten the development of climate finance and enable the growth of green hydrogen production and consumption. The World Bank claims that these subsidies will encourage investment in low-carbon initiatives as well.

“Reforms targeted at increasing the production of green hydrogen and electrolysers, which are essential for green hydrogen production, will be supported by the Second Low-Carbon Energy Programmatic Development Policy Operation,” the World Bank said. This project is in line with India’s aggressive goals for its energy transformation, which include attaining net zero by 2070 and installing 500 GW of renewable energy capacity by 2030. To further encourage the production of electrolysers and green hydrogen, the Indian government has initiated the ₹17,000-crore National Green Hydrogen Mission.

Along with encouraging battery energy storage options and changing the Indian Electricity system Code to better incorporate renewable energy into the system, the operation will also assist changes aimed at increasing the penetration of renewable energy. Measures like abolishing transmission charges for renewable energy in green hydrogen projects, conducting annual tenders for 50 GW of renewable energy, and creating a legal framework for a national carbon credit market were supported by the first phase of funding, which concluded in June 2023.

Auguste Tano Kouame, the World Bank’s Country Director for India, stated, “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.” He stressed that increasing private investment in green hydrogen and renewable energy is a key component of both funding stages.

Beginning in FY25–26, the reforms backed by this operation are anticipated to produce at least 450,000 metric tonnes of green hydrogen annually and 1,500 MW of electrolysers. Furthermore, it will provide a 50 million tonnes annual decrease in emissions and greatly expand the capacity of renewable energy. Additionally, the operation will promote the growth of the country’s carbon credit market.

“India has acted decisively to create a homegrown green hydrogen market, supported by quickly growing renewable energy potential. Team Leaders Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal stated that there has been a significant amount of private sector interest in the initial tenders under the National Green Hydrogen Mission’s incentive program. The initiative’s significance in augmenting investments in green hydrogen and renewable energy infrastructure was emphasized, since it aids India in accomplishing its Nationally Determined Contributions objectives.

The International Development Association (IDA) has provided $31.5 million in credit and the International Bank for Reconstruction and Development (IBRD) has loaned $1.46 billion to fund this operation. The goals of the Indian government regarding energy security and the Bank’s Hydrogen for Development (H4D) Partnership are in line with this operation.