The World Bank has approved $1.5 billion in financing to bolster India’s efforts in developing low-carbon energy.

The initiative, part of the second low-carbon energy programmatic development policy operation, aims to foster a robust market for green hydrogen, expand renewable energy, and stimulate investments in low-carbon energy.

The World Bank said for India to decouple economic growth from emissions, the country must scale up renewable energy, particularly in industrial sectors that are challenging to decarbonize.

This entails a significant increase in green hydrogen production and consumption and accelerated development of climate finance to support low-carbon investments.

The second low-carbon energy programmatic development policy operation is the second in a series, each valued at $1.5 billion. This financing will support reforms to enhance green hydrogen production and electrolyzers.

It also promotes renewable energy integration by incentivizing battery energy storage and amending the Indian electricity grid code for better renewable energy integration.

The initiative aligns with the Government of India’s energy security and the World Bank’s Hydrogen for Development Partnership. The financing 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).

In June 2023, the World Bank approved the first policy operation, which waived transmission charges for renewable energy in green hydrogen projects, set a path for 50 GW of renewable energy tenders annually, and established a legal framework for a national carbon credit market.

“The World Bank is pleased to continue supporting India’s low-carbon development strategy, which will help achieve the country’s net-zero target while creating clean energy jobs in the private sector,” said Auguste Tano Kouame, World Bank Country Director for India.

The reforms supported by this operation are projected to produce at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually from the financial year 2025-26.

Additionally, it is expected to significantly increase renewable energy capacity and reduce emissions by 50 million tons per year. The operation will also advance the development of a national carbon credit market.

The initiative aligns with the Government of India’s energy security and the World Bank’s Hydrogen for Development (H4D) Partnership. The financing 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).

The World Bank also approved a $200 million loan to the Government of Himachal Pradesh to help the state achieve its target of adding 10 GW of additional renewable energy capacity and introducing power sector reforms.