The World Bank’s Board of Executive Directors has approved $1.5 billion in financing to accelerate India’s development of low-carbon energy. The funding will help India promote low-carbon energy by scaling up renewable energy, developing green hydrogen, and stimulating climate finance for low-carbon energy investments.
India is one of the fastest-growing large economies in the world. While the country’s energy consumption per capita is only one-third of the global average, India’s energy demand is expected to grow rapidly as the economy expands. This calls for a phasing down of fossil-based energy sources in line with India’s goal of achieving net zero by 2070. The industrial sector is the main driver for future growth of energy demand and emissions, and green hydrogen can play a critical role in initially decarbonising the hard-to-abate industrial sectors, such as fertilizer and refinery industries, and later heavy industries, including iron and steel. India has achieved impressive progress in renewable energy installed capacity and a decline in costs. Scaling up the production of renewable energy will accelerate the transition to low-carbon electricity and support the emergence and expansion of the green hydrogen sector, the World Bank stated in a press release.
The program aims to scale up renewable energy supply thereby reducing costs and improving grid integration. This will help India reach its committed 500 GW renewable energy capacity by 2030. The government plans to issue bids for 50 GW of renewable energy each year from FY23-24 to FY27-28, which will avoid carbon emissions of 40 million tons per annum by 2026.
A national carbon market is essential to provide a level playing field between low-carbon energy and fossil fuels. This program will support policies for a national carbon credit trading scheme to launch a national carbon market. In January 2023, India issued its first sovereign green bond. The program will support policy actions for the issuance of $6 billion in sovereign green bonds by 2026.
