India Gets Additional $1.5 Bn from World Bank to Develop Low-Carbon Energy Infrastructure

The World Bank has granted USD 1.5 billion in financing to help India expedite the development of low-carbon energy infrastructure.

The financing for the operation includes a $1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $31.5 million credit from the International Development Association (IDA).

This funding aims to boost low-carbon energy by scaling up renewable energy and producing green hydrogen, among other initiatives. India, as the fastest-growing large economy globally, faces the challenge of decoupling economic growth from emissions growth. To achieve this, the World Bank's support focuses on:

• Green Hydrogen: The operation aims to promote the development of a vibrant market for green hydrogen, which is critical for decarbonization.
• Renewable Energy: Scaling up renewable energy is essential, especially in hard-to-abate industrial sectors.
• Climate Finance: The financing will stimulate climate finance for low-carbon energy investments, supporting India's transition toward cleaner energy sources.

This strategic investment aligns with India's net-zero target and will create clean energy jobs in the private sector. By FY25/26, the reforms supported by this operation are expected to result in the production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually. Additionally, it will significantly increase renewable energy capacity and contribute to reducing emissions by 50 million tons per year.

Impact on India's energy sector

The World Bank's additional financing of USD 1.5 billion will significantly impact India's energy sector by accelerating its transition toward a low-carbon economy. Here are the key areas of impact

1. Green Hydrogen Development: The funding will promote the development of a vibrant market for green hydrogen. Green hydrogen, produced using renewable energy, has immense potential for decarbonization and can be used in various sectors, including industry and transportation.

2. Renewable Energy Scaling: India aims to scale up its renewable energy capacity. The financing will support projects that enhance solar, wind, and other renewable energy sources. This will contribute to reducing greenhouse gas emissions and improving energy security.

3. Clean Energy Jobs: The investment will create jobs in the private sector related to clean energy production, distribution, and technology development. This will boost employment opportunities and contribute to economic growth.

4. Emission Reduction: By FY25/26, the reforms supported by this operation are expected to result in the production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually. Additionally, it will significantly reduce emissions by 50 million tons per year.

Overall, this funding aligns with India's net-zero target and supports the country's efforts to transition to sustainable and cleaner energy sources.

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