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India Gets $1.5 billion From World Bank For Green Hydrogen Production & National Carbon Market

The Indian government will get $1.5 billion in finance from the World Bank to expand its use of renewable energy and green hydrogen as well as to support other climate-related programs.

According to Auguste Tano Kouame, the World Bank’s country director for India, “the program will support the successful implementation of the National Green Hydrogen Mission, which seeks to stimulate $100 billion in private sector investment by 2030.”

The establishment of a national carbon credit trading system, which would put a cap on greenhouse gas emissions from industry and power, will also be supported by this financing.

Although the government is still working on the regulations for this carbon program, it will likely include fertilizers and refining, both of which require significant amounts of hydrogen created from fossil gas. This might be used as a lever to encourage these sectors to adopt low-carbon substitutes like renewable H2.

However, officials have been evasive about the precise date of the tender. India is scheduled to host its maiden auction for subsidies towards green hydrogen production and electrolyzer manufacture this summer.

The government has allocated $1.59 billion to assist the production of 450,000 tonnes of hydrogen annually, but it will only provide support for three years and has set a cap on bids at $0.60 per kilogram of subsidy for the first year, falling to $0.49 per kilogram and $0.37 per kilogram for each further year.

These subsidies might not be sufficient to close the price difference between grey H2 produced from unabated fossil fuels and green H2, and they are insignificant in comparison to the US hydrogen tax credits of up to $3/kg over ten years, which may not be attractive to foreign investors.

Although the specifics of this auction’s methodology have not been made public, a second tender will also be held to sell quantities of low-carbon H2 for industrial use.

The $1.5 billion financing package consists of a $1.44 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $56.57 million credit from the International Development Association (IDA). The IBRD loan is made possible by a $1 billion backstop from the UK to increase the World Bank’s climate change financing to India.

Source: Hydrogen Insights

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