On 29th June 2023, The World Bank granted USD1.5 billion in financing to accelerate India’s development of low-carbon energy sources. This funding aims to assist India in scaling up renewable energy, fostering the growth of green hydrogen, and stimulating climate finance for investments in low-carbon energy.
- The program’s objectives include scaling up renewable energy supply to reduce costs and improve grid integration.
- This will assist India in achieving its target of 500 GW of 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.
Disbursement of loanÂ
- The International Bank for Reconstruction and Development (IBRD) is providing a loan of USD 1.44 billion, supported by a USD 1 billion backstop from the United Kingdom, to enhance the World Bank’s climate change financing to India.
- Additionally, a credit of USD 56.57 million from the International Development Association (IDA) is sourced from the recommitment of previously cancelled IDA credit balances.
Background:
India, a rapidly growing economy, currently has lower per capita energy consumption compared to the global average. To align with its objective of achieving net-zero emissions by 2070, India aims to gradually phase out the use of fossil fuel-based energy sources.
Green Hydrogen production in India:
i.The Indian government has introduced highly anticipated incentive schemes, valued at over ₹17,000 crore, to promote the production of green hydrogen.
- The First Low-Carbon Energy Programmatic Development Policy Operation, the first of two planned operations, will facilitate India’s development of green hydrogen.
- Through this program, the implementation of the National Green Hydrogen Mission will be supported. This mission aims to attract USD100 billion in private sector investments by 2030.
- This program will support the implementation of policies for a national carbon credit trading scheme, facilitating the launch of a national carbon market.
ii. In January 2023, India issued its first sovereign green bond. The program will further support policy actions to issue USD6 billion in sovereign green bonds by 2026.
- This lending is also in line with the Bank’s Hydrogen for Development (H4D) Partnership launched during the 27th Conference of the Parties (CoP27).
World Bank Approves USD200 Million Loan to Boost Renewable Energy in Himachal Pradesh
On 27 June 2023, World Bank approved the USD200 million loan to Government of Himachal Pradesh with a maturity period of 14.5 years, including a grace period of 4.5 years. The objective of the loan is to facilitate power sector reforms in the state and accelerate the adoption of renewable energy (RE) in its electricity generation.
- This will help to achieve the state’s objective of adding 10,000 megawatts (10 gigawatts) of additional RE capacity to make the state’s power supply greener.
- The World Bank’s Himachal Pradesh Power Sector Development Program will contribute to enhancing the utilisation of existing renewable energy resources, particularly hydropower, and diversifying the state’s energy mix.
Key points:
i.Himachal Pradesh’s ambitious target is to become a ‘Green State’ by 2030, meeting all its energy needs through renewable and green sources. Currently, over 80 percent of Himachal Pradesh’s energy demands are fulfilled by hydropower.
ii.As part of the program, 150 megawatts of solar capacity will be added, resulting in a reduction of more than 190,000 metric tons of greenhouse gas emissions annually.
iii.This initiative also aligns with the National Apprentice Promotion Scheme implemented by the Ministry of Skill Development and Entrepreneurship by providing training and hands-on exposure in the power sector for about 700 female apprentice
About World Bank:
Establishment – July, 1944
Headquarters – Washington DC, United States of America(USA)
President – Ajay Banga
Five Institutions of World Bank Group:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
