In a significant boost to India's clean energy push, the World Bank's Board of Directors have approved $1.5 billion in financing. These funds will accelerate India's shift towards low-carbon energy sources. This funding is designed to support India in scaling up its renewable energy capacity, advancing the development of green hydrogen technologies, and facilitating climate finance for investments in low-carbon energy initiatives.

The initial Low-Carbon Energy Programmatic Development Policy Operation, the first of a planned series of two operations, aims to aid India in advancing green hydrogen technology. Green hydrogen is produced through water electrolysis powered by renewable energy sources. Recognizing that public sector funding alone is insufficient for India's ambitious energy transition goals, this operation focuses on leveraging recent achievements to attract private investment and additional support. It addresses viability gaps in funding, mitigates risks for off-takers, enhances grid integration of renewable energy, and stimulates demand for sustainable energy solutions. These efforts are crucial for fostering a more resilient and sustainable energy landscape in India.

Auguste Tano Kouame, World Bank Country Director for India, highlighted that the approved program aims to facilitate the National Green Hydrogen Mission's implementation. This initiative targets to catalyze $100 billion in private sector investments by 2030. The World Bank's role is to bolster India's low-carbon transition by leveraging public financing and fostering an environment conducive to private sector participation.

The program aims to significantly expand India's renewable energy capacity to reduce costs and enhance grid integration, facilitating the achievement of its target of 500 GW of renewable energy by 2030. To expedite this, the government plans to auction 50 GW of renewable energy annually from FY23-24 to FY27-28, which is projected to prevent 40 million tons of carbon emissions annually by 2026.

Recognizing the need for a level playing field between low-carbon energy and fossil fuels, the program advocates for policies supporting a national carbon credit trading scheme to establish a national carbon market. This initiative is crucial for incentivizing emissions reductions across sectors.

Xiaodong Wang, Dhruv Sharma, and Surbhi Goyal, Team Leaders for the project, emphasized that India has the potential to decouple emissions from economic growth by enhancing energy efficiency and transitioning to renewable sources. They underscored the importance of continuous policy reforms that can stimulate private sector investments, generate employment opportunities, and ultimately help India achieve its net-zero emissions targets.

Additionally, following India's inaugural sovereign green bond issuance in January 2023, the program aims to foster policies facilitating the issuance of $6 billion in sovereign green bonds by 2026. These actions are intended to mobilize capital towards sustainable development and climate resilience initiatives in India.

This initiative represents a pivotal component of the World Bank's extensive support for India's energy transition, closely aligned with the Government of India's energy security strategy. Moreover, it corresponds with the World Bank's Hydrogen for Development (H4D) Partnership, inaugurated at CoP27, underscoring its commitment to advancing sustainable energy solutions globally.

The financing comprises a $1.44 billion loan from the International Bank for Reconstruction and Development (IBRD), augmented by a $1 billion backstop from the United Kingdom. This backstop is intended to bolster the World Bank's climate change financing initiatives in India significantly. Additionally, a $56.57 million credit from the International Development Association (IDA) represents a reallocation of previously cancelled IDA credit balances, further supporting the program's implementation and impact.