Current Steelmaking Routes and Emissions
India is the world’s largest producer of Direct Reduced Iron (DRI), but 81% of its DRI is produced using emission-intensive rotary kilns. The steel industry’s reliance on coal and natural gas results in high CO₂ emissions, with traditional Blast Furnace-Basic Oxygen Furnace (BF-BOF) processes emitting 2.33 tons of CO₂ per ton of steel.
How Green Hydrogen Can Help
Green hydrogen can replace fossil fuels in multiple stages of steel production:
1. Ironmaking: Hydrogen can be used in DRI processes, reducing emissions by up to 90% compared to coal-based methods.
2. Blast Furnaces: Hydrogen injection can cut coke consumption, lowering emissions by 8%.
3. Downstream Processes: Hydrogen blending in reheating furnaces and galvanizing units further reduces emissions.
Key Stat: In a net-zero 2070 scenario, green hydrogen-based DRI could account for 41% of India’s steel production (597 MMTPA), requiring 15.15 MMTPA of green hydrogen.
Economic Viability and Investment Needs
Cost Projections
– Current Cost (2024): US$7/kg of green hydrogen.
– Projected Cost (2040): US$1.8/kg, driven by technological advancements and economies of scale.
– Steel Production Costs:
– H₂-DRI Route: Expected to drop from US$600/ton (2024) to US$421/ton (2040).
– BF-BOF Route: Costs may rise to US$659/ton (2040) due to carbon pricing.
Investment Requirements
To achieve 245 MMTPA of H₂-DRI capacity by 2070, India needs US$297–304 billion in investments. Key areas include:
– Electrolyzer manufacturing.
– Renewable energy infrastructure.
– Hydrogen storage and pipeline networks.
Challenges and Solutions
1. High Initial Costs
– Challenge: High capital expenditure for electrolyzers and infrastructure.
– Solution: Government incentives like tax breaks, PLI schemes, and PPP models to reduce costs.
2. Infrastructure Gaps
– Challenge: Lack of hydrogen pipelines and storage facilities.
– Solution: Develop hydrogen hubs and leverage existing industrial clusters in eastern India.
3. Technological Barriers
– Challenge: Immature technologies like biomass gasification and solid oxide electrolysis.
– Solution: Boost R&D and pilot projects to improve efficiency.
4. Supply Chain Fragmentation
– Challenge: Lack of standardized hydrogen transport and storage.
– Solution: Establish industry-wide standards and foster global collaborations.
Recommendations for Stakeholders
For the Government:
1. Implement a National Green Hydrogen Policy with adoption targets.
2. Introduce carbon pricing (US$90–100/ton CO₂) to incentivize decarbonization.
3. Develop renewable energy parks near steel plants.
For the Steel Industry:
1. Adopt proven technologies like alkaline electrolysis and H₂-DRI.
2. Pilot emerging solutions such as biomass gasification with CCUS.
3. Collaborate with hydrogen producers to secure long-term supply.
For Hydrogen Producers:
1. Explore business models like captive plants and third-party supply agreements.
2. Invest in R&D to reduce electrolyzer costs (target: **US$500–700/kW**).
Conclusion
Green hydrogen holds the key to decarbonizing India’s steel industry, aligning with global climate goals while ensuring long-term competitiveness. While challenges like high costs and infrastructure gaps persist, strategic interventions from the government, industry, and hydrogen producers can accelerate this transition. By 2040, green hydrogen-based steelmaking is expected to become economically viable, paving the way for a sustainable and resilient steel sector.
India’s journey toward green steel is not just an environmental imperative but also an opportunity to lead the global shift toward sustainable industrial practices. The time to act is now.
References:
– Whitepaper by EY Parthenon and WWF-India (April 2025).
– National Hydrogen Mission, Government of India.
– International Energy Agency (IEA) reports.
