World Bank approves $1.5bn for India’s low-carbon transition
SUMMARY
This funding will assist India in scaling up renewable energy, promoting the development of green hydrogen.
By Shardul SharmaThe World Bank has approved $1.5bn in financing to support India's development of low-carbon energy, it said on June 29. This funding will assist India in scaling up renewable energy, promoting the development of green hydrogen, and stimulating climate finance for low-carbon energy investments.
To align with its goal of achieving net-zero emissions by 2070, India needs to phase out fossil-based energy sources. The industrial sector, which is expected to drive future energy demand and emissions, can benefit from green hydrogen to decarbonise hard-to-abate sectors like fertilizers, refineries, and later heavy industries such as iron and steel, World Bank said.
The approved financing, called the First Low-Carbon Energy Programmatic Development Policy Operation, will specifically support India in developing green hydrogen.
The program's objective is to scale up renewable energy supply, reduce costs, and improve grid integration. This will help India achieve its target of 500 GW of renewable energy capacity by 2030. The government plans to issue bids for 50 GW of renewable energy each year from fiscal year 2023-24 to fiscal year 2027-28, resulting in the avoidance of 40mn metric tons of carbon emissions annually by 2026.
To ensure a level playing field between low-carbon energy and fossil fuels, the programme will support the establishment of a national carbon credit trading scheme and the launch of a national carbon market. In January 2023, India issued its first sovereign green bond, and the programm will aid in the issuance of $6 billion in sovereign green bonds by 2026.
The financing includes a $1.44bn loan from the International Bank for Reconstruction and Development (IBRD), which is further supported by a $1bn backstop from the United Kingdom aimed at boosting the World Bank's climate change financing to India. Additionally, a credit of $56.57mn from the International Development Association (IDA) has been allocated from previously canceled IDA credit balances.
