World Bank’s $1.5 Billion Loan to Support India’s Low-Carbon Energy Transition

The financing will support the development of green hydrogen projects and a national carbon market.


The World Bank Group’s Board of Executive Directors has approved $1.5 billion in financing to accelerate the development of low-carbon energy in India by scaling-up green hydrogen projects and promoting climate finance for clean energy investments.

The funding operation titled First Low-Carbon Energy Programmatic Development Policy Operation is the first in the series of investments by the World Bank to support India’s energy transition through 2070.

The operation is expected to 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.

While India’s per capita energy consumption is one-third of the global average, the rapid economic scaling across sectors is expected to fuel the demand for energy in the coming years.

According to the World Bank, the development and deployment of green hydrogen would act as a catalyst for India’s industrial sector, which is the primary driver of such increasing demand, given the future levels of greenhouse gas emissions, which would peak with the expansion of the industries.

Auguste Tano Kouame, World Bank Country Director for India, said, “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.”

The operation also aligns with the Bank’s Hydrogen for Development (H4D) Partnership launched at CoP27.

The Ministry of New and Renewable Energy has also released a framework document outlining incentive programs for the manufacturing of electrolyzers and the production of green hydrogen within the country, with a combined financial outlay of ₹174.9 billion (~$2.1 billion).

The program aims to scale up renewable energy supply, thereby reducing costs and improving grid integration in India.

The World Bank acknowledged the importance of a national carbon market to provide a level playing field for low-carbon energy when competing again fossil fuel investments.

The program would support policies to launch a national carbon market in India.

It would also support policy actions for the issuance of $6 billion in sovereign green bonds by 2026.

The funding of $1.5 billion includes $1.44 billion provided by the International Bank for Reconstruction and Development. It is facilitated by a backstop of $1 billion provided by the United Kingdom to boost the climate change financing extended to India.

A credit of $56.57 million is also being provided from the International Development Association (IDA), which is from a recommitment of canceled IDA credit balances.

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