The World Bank stated the $1.5 billion program will be the first in a series of two Development Policy Operations (DPOs). Building on recent successes, it will help stimulate private financing and other support by addressing viability funding gaps, reducing off-taker risks, boosting grid integration of renewables, and stimulating demand for renewable energy.
“The program will support the successful implementation of the National Green Hydrogen Mission that aims to stimulate $100 billion in private sector investment by 2030,” said Auguste Tano Kouame, World Bank Country Director for India. “The World Bank remains committed to supporting India’s low-carbon transition by complementing public financing and enabling private sector investments.”
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 of renewable energy capacity by 2030.
The government of India plans to issue bids for 50 GW of renewable energy each year from FY2023-24 to FY2027-28.
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.
“India can decouple emissions from growth through improved energy efficiency and switching to clean energy,” said Xiaodong Wang, Dhruv Sharma, and Surbhi Goyal, Team Leaders for the project. “Through sustained policy reforms India can mobilize private sector investments, create jobs and achieve net-zero targets.”
“The $1.44 billion loan is from the International Bank for Reconstruction and Development (IBRD) and is facilitated by a United Kingdom $1 billion backstop aimed at boosting the World Bank’s climate change financing to India. There is also a $56.57 million credit from the International Development Association (IDA) from a recommitment of cancelled IDA credit balances.
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