World Bank Approves $1.5 Billion to Accelerate India's Low-Carbon Energy Development
This week, The World Bank approved $1.5 billion in financing to support India's low-carbon transition. This approval represents a massive step towards addressing climate change and promoting sustainable development in India. Dedicated to reducing India’s greenhouse gas emissions, enhancing energy efficiency, and promoting renewable energy sources, this financing should help meet all of those goals. Highlighting, the international community's commitment to supporting India's efforts in combating climate change and signifies a shared dedication to building a more sustainable and resilient economy.
"This financing will support India in its ambitious efforts to reduce its carbon footprint and advance its clean energy goals. It demonstrates the World Bank's commitment to helping countries like India transition to a low-carbon, sustainable future," said David Malpass, President of the World Bank.
Currently, India is one of the fastest-growing large economies in the world and is projected to see the demand for energy grow substantially as the economy expands. With a net-zero goal by 2070 India will need to begin shifting from fossil fuel-based energy sources to more renewable sources immediately. With this funding from The World Bank, there are a few areas that this will be applied to.
First, this financing will be used to begin scaling up the renewable energy supply in India, which is ultimately aiming to reduce costs and improve grid integration. This effort aligns with India's target of achieving 500 GW of renewable energy capacity by 2030. The government plans to issue bids for 50 GW of renewable energy annually from FY23-24 to FY27-28, resulting in the avoidance of 40 million tons of carbon emissions per year by 2026.
Second, these funds will go towards developing green hydrogen. India recognizes the crucial role of green hydrogen in decarbonizing industrial sectors. The financing will support the development of green hydrogen by promoting electrolysis of water using renewable energy sources. This initiative aims to reduce emissions in industries such as fertilizer, refining, and later heavy industries like iron and steel. Scaling up green hydrogen production will contribute to a low-carbon electricity transition and the growth of the green hydrogen sector.
Third, this approval from The World Bank is actually a bit more than just a financial package and is hoping to stimulate private financing and the Carbon Market. What this means, is that in order to meet the financial requirements of India's energy transition, public sector funding alone will not be sufficient. The World Bank financing will address viability funding gaps, reduce off-taker risks, boost renewable energy grid integration, and stimulate demand for renewable energy. Additionally, the program will support policies for the launch of a national carbon credit trading scheme and the issuance of sovereign green bonds. These measures aim to stimulate private sector investments, create jobs, and provide a level playing field between low-carbon energy and fossil fuels.
In summary, The World Bank's approval of $1.5 billion in financing to support India's low-carbon transition marks a significant milestone in the country's efforts to combat climate change and promote sustainable development. The financing will accelerate India's development of low-carbon energy by scaling up renewable energy capacity, promoting green hydrogen, and stimulating private-sector investments. By reducing reliance on fossil fuels, India can achieve its net-zero target and contribute to global sustainability goals. The World Bank remains committed to supporting India's journey towards a low-carbon future, facilitating the transition through public financing and enabling private sector participation. With the World Bank's support, India is well-positioned to accelerate its transition to a low-carbon economy and make substantial progress toward achieving its climate goals.
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Read or download the full report here: https://zerotracker.net/analysis/net-zero-stocktake-2023
