World Bank’s Second $1.5 Billion Loan Reflects Confidence in India’s Green Hydrogen Policies

The World Bank's recent extension of a $1.5 billion development loan to India signifies a robust endorsement of the country’s green hydrogen initiatives. This loan, following an identical one granted in June 2023, highlights the institution's confidence in India’s evolving energy landscape.

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Strategic Policy Interventionsx

The Indian government's proactive measures have been instrumental in fostering a domestic ecosystem for green hydrogen and low-carbon energy. According to Surbhi Goyal, Senior Energy Specialist at the World Bank, these interventions have been pivotal in shaping the country’s energy future. "We saw a lot of actions taken by the government, especially on demand generation for green hydrogen, which gave us a lot of confidence," Goyal stated.

Government Initiatives

• Subsidies and Manufacturing: Subsidies for manufacturing electrolyzers and green hydrogen have been crucial in driving the country's energy transition.
• Carbon Credit Trading Scheme (CCTS): The introduction of CCTS is expected to ignite a domestic carbon credit market, enhancing financial access for low-carbon energy projects.
• Policy Definitions: Defining green hydrogen for policy purposes in August 2023 provided much-needed clarity on acceptable green hydrogen standards in India. 

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Tenders and Demand Generation

The government's strategic initiatives include tenders by the Solar Energy Corp of India (SECI) to establish electrolyzer and green hydrogen manufacturing in India. These tenders are pivotal in generating demand and boosting investor confidence.

SECI's Role

• Green Ammonia: SECI invited bids for supplying 539,000 million tonnes of green ammonia per annum for the fertilizer industry.

• Oil Marketing Companies: State-owned oil marketing companies are working on tenders to establish green hydrogen units at their refineries.

"This is a very strong demand signal. Any stakeholder we are talking to is saying these tenders have given a lot of confidence that 'Yes, now India has shown its seriousness towards green hydrogen,'" Goyal remarked.

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Key Performance Indicators

The World Bank has set several key performance indicators for the two loans, which will be monitored until June 2026, although no interim targets have been established.

Conclusion

The World Bank’s second $1.5 billion loan underscores a significant endorsement of India's green energy policies. The Indian government's aggressive policy actions and strategic initiatives in green hydrogen and low-carbon energy have inspired confidence among global financial institutions, marking a major milestone in India's journey towards a sustainable energy future.

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