‘Today, every investment should be climate finance’: World Bank India director | Latest News India - Hindustan Times

‘Today, every investment should be climate finance’: World Bank India director

ByJayashree Nandi
Jun 29, 2024 11:53 AM IST

The World Bank’s Board of Executive Directors approved $1.5 billion in financing to help India accelerate the development of low-carbon energy

New Delhi: The World Bank’s Board of Executive Directors approved $1.5 billion in financing to help India accelerate the development of low-carbon energy. The loan will promote green hydrogen production, scale up renewable energy, and stimulate finance for low-carbon energy investments. Last year, the World Bank approved the first iteration of the loan, which was also of similar magnitude. All finance should be climate finance in today’s world and the courageous countries that embrace energy transition will be the biggest beneficiaries going forward, World Bank country director Auguste Tano Kouamé said in an interview. Kouame also said the World Bank will be rolling out concessional loans for global challenges related to the climate crisis.

World Bank India director Auguste Tano Kouamé (Sourced Photo)
World Bank India director Auguste Tano Kouamé (Sourced Photo)

How will the new loan help India achieve its nationally determined contributions under the Paris Agreement?

India’s NDCs are quite ambitious. India wants to increase installed capacity for non-fossil fuel-based power sources equivalent to 50% of the country’s requirement by 2030; reduce the emissions intensity of its Gross Domestic Product (GDP) by 45% from 2005 levels by the year 2030; and increase carbon sink capacity of the economy by increasing India’s forest cover. This operation will help with the first two objectives. The National Green Hydrogen Mission wants to mobilise $100 billion worth of investments in the production of green hydrogen and electrolysers by 2030, which will correspond to about 5 million metric tonnes per year (MTPA) of green hydrogen produced by 2030. So, that will help reduce the CO2 content of GDP. The operation that we just approved as well as the first operation that was approved last year, will help with measures to increase the production of green hydrogen and measures to increase the production of renewable energy. This is because we recognise that if we want green hydrogen ambitions to be met, renewable energy will play a critical role and needs to be increased manifolds.

Are you seeing an increase in interest in investing in green hydrogen?

We are already seeing that. Since the first operation (loan) was approved, the private sector already expressed interest in investing in green hydrogen worth up to $ 70 billion, as per our calculation. They are already making very quick progress. We are estimating the contribution of this loan operation up to 2026.

By 2026, our support will contribute to incentivising production capacity up to three million metric tonnes of green hydrogen. The operation will also support the incentives to achieve of 3GW worth of electrolysers produced in India. That will contribute to reduced reliance on imported electrolysers.

Further, the government has issued a tender notice that they will buy a given quantity of green hydrogen for fertilizers in the form of green ammonia and bulk purchase for refineries.

One of the major issues in climate negotiations this year is climate finance. Some UN estimates say developing countries need $2.4 trillion a year to transition. How can the World Bank help address this?

My personal view is that there is no such thing as climate finance. In today’s economy every finance, every investment should be climate finance. If you were to need trillions to develop an economy, and you expect the world to give some additional money for climate finance... no. The trillions that you are using or whatever amount, should be your climate finance. Climate finance is not going to come from another planet. It’s going to come from Planet Earth and on this planet, there is a limited pot of money that all the countries are using.

My plea would be that the whole world should say ok, the money we are getting from taxes and other sources... all the money we should use for climate — either for adaptation or for mitigation. But if you say we are going to use this pot of money for traditional ways like building polluting industries and then expect somebody is going to give climate finance then it will not happen. Countries that are going to do the courageous thing are going to be the biggest beneficiaries.

The World Bank’s view is that countries need development financing and we are going to work with countries to have more development funding available and support the green transition agenda.

Look at our portfolio now, it’s all green financing. Around 20 years ago there was hardly any green financing. Now we will not invest in infrastructure that is not resilient. India issued its first green bond in 2023 and under our cooperation, we are going to work with the government to issue another $6 billion worth of sovereign green bonds.

How will the Loss and Damage fund for which the World Bank is host and trustee be operationalised? Could you explain to a layperson how it works?

The loss and Damage fund is not relevant for India. Loss and Damage fund is good for small islands in the Caribbean and Pacific and low and medium countries that are hit repeatedly with climate shocks. The fund will help them finance projects either through direct financing or by reducing the cost of borrowing.

How can the indebtedness of developing countries be addressed through concessional loans? Do you have any plans for that?

In India, the window that which World Bank uses to provide loans is the International Bank for Reconstruction and Development. It is not as concessional as the International Development Association. India has graduated from IDA because it has done very well economically. But for IBRD countries also we recognise there is a need for concessional loans especially for global challenges or global public goods like addressing climate change. For projects that support the climate agenda or benefit the global economy, we are coming up with a framework for financial incentives. So even IBRD countries can have some concessionality built into the loan because what they are doing is good for the world. This is an innovation that our new President Ajay Banga has come up with. It will be effective soon.

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