India’s steel industry has been a foundational pillar of the nation’s industrial and economic progress, playing a pivotal role in infrastructure development and contributing significantly to GDP growth. With roots tracing back to the early 20th century, the sector has grown exponentially, establishing India as the world’s second-largest producer of steel. In 2023, India achieved a milestone by producing 140 million tonnes of steel, accounting for approximately 7.5% of the global output. This underscores the sector’s crucial contribution to infrastructure, energy, and manufacturing industries, driving the nation’s aspirations for industrial expansion.
Challenges of the Steel Industry
Despite its economic significance, the steel industry is one of the most energy-intensive sectors globally. The conventional methods of steel production, predominantly reliant on coal, are major contributors to greenhouse gas (GHG) emissions. Traditional blast furnace-basic oxygen furnace (BF-BOF) processes emit large volumes of carbon dioxide (CO₂), making the industry a significant source of global and local environmental pollution. In India, the sector is responsible for around 10-12% of the country’s total GHG emissions, presenting a serious challenge as climate concerns take center stage on the global agenda.
India’s emission intensity in steel production, at 2.55 tonnes of CO₂ per tonne of crude steel, surpasses the global average of 1.85 tonnes, highlighting the pressing need for reform. With the growing demand for steel driven by urbanization and large-scale infrastructure projects, carbon emissions from the steel industry are projected to increase unless innovative and sustainable production methods are adopted.
Moving Towards Sustainability: Green Steel
“Green steel” represents a transformative approach to steelmaking, focused on significantly reducing carbon emissions. This involves transitioning away from fossil fuels like coal and integrating renewable energy sources and advanced technologies into the production process. Hydrogen-based steel production, commonly referred to as green hydrogen, is emerging as a game-changer in this domain.
India is at the early stages of adopting green steel technologies. However, increasing government initiatives, evolving market trends, and heightened environmental awareness are driving momentum. A detailed roadmap, as outlined in the report “Greening the Steel Sector in India: Roadmap and Action Plan,” proposes ambitious targets. By FY27, government procurement policies (GPP) are projected to elevate the consumption of green steel to 2.2 million tonnes, with an expected increase to 10.6 million tonnes by FY31. This shift is anticipated to bridge the price gap between green steel and conventional steel, fostering widespread adoption and positioning India as a leader in sustainable steel production.
The Role of Green Hydrogen in Decarbonizing Steelmaking
Green hydrogen is gaining global attention as a revolutionary solution for decarbonizing steel production. Unlike traditional hydrogen production methods that depend on natural gas and emit CO₂, green hydrogen is produced via water electrolysis powered by renewable energy. This process generates hydrogen and oxygen without any carbon emissions, offering a clean alternative for industrial applications.
In steelmaking, green hydrogen is particularly effective in the direct reduction of iron (DRI), where it substitutes coal as the reducing agent. This method significantly reduces CO₂ emissions and is currently being piloted in multiple projects worldwide. Countries like Sweden, Germany, and Australia are already pioneering hydrogen-based steelmaking technologies, setting ambitious goals for carbon-neutral steel production by the end of the decade.
Green hydrogen’s compatibility with existing infrastructure is another advantage. For example, renewable-energy-generated hydrogen can be transported through natural gas pipelines, reducing the need for extensive new infrastructure. Additionally, blending green hydrogen with natural gas provides an incremental pathway to decarbonization while utilizing current systems efficiently.
As global research and development progress, the cost of green hydrogen is projected to decline significantly, reaching as low as USD 1 per kilogram by 2030. This price reduction will make green hydrogen an economically viable solution for large-scale adoption in the steel industry.
India’s Path to Net Zero and Policy Initiatives
As a signatory to the Paris Agreement, India has committed to achieving net-zero emissions by 2070. The steel industry plays a vital role in this transition, given its substantial carbon footprint. The introduction of a national green steel policy aims to align steel production with climate objectives, reduce emissions, and boost green steel adoption. By fostering innovation and providing incentives for renewable energy integration, India can achieve its sustainability goals while maintaining economic growth.
Government support, in the form of subsidies and research grants, will be essential for advancing technologies like hydrogen-based production and other clean energy solutions. Collaborative efforts between public and private sectors can further accelerate the transition to green steel, ensuring the industry’s global competitiveness in a decarbonized economy.
Carbon Capture, Utilisation, and Storage (CCUS): A Supporting Technology
In addition to green hydrogen, Carbon Capture, Utilisation, and Storage (CCUS) is emerging as a critical tool for reducing emissions from steel production. CCUS technologies capture CO₂ emissions from industrial processes, enabling their reuse in various applications or permanent storage underground. According to industry reports, CCUS could potentially mitigate up to 56% of emissions in the steel industry.
However, implementing CCUS at scale presents challenges. The current cost of capturing CO₂ ranges from USD 45 to USD 60 per tonne, making it an expensive solution. Moreover, the infrastructure required for transporting and storing captured CO₂ is still underdeveloped. Despite these obstacles, CCUS remains a promising medium- to long-term solution for addressing emissions that cannot be mitigated through alternative production methods.
Global Examples and India’s Opportunity
Internationally, the steel industry is witnessing rapid advancements in sustainable production practices. Countries like Sweden have launched projects to produce the world’s first commercially available fossil-free steel using green hydrogen, setting benchmarks for the global industry. Similarly, Germany’s ongoing initiatives to integrate renewable energy into steelmaking processes have demonstrated the feasibility of large-scale decarbonization.
India, with its abundant renewable energy resources and growing industrial base, is uniquely positioned to capitalize on these developments. Strategic investments in research and infrastructure, coupled with supportive policies, can enable the Indian steel industry to lead the global transition toward sustainable production.
Conclusion: A Sustainable Future for India’s Steel Industry
The shift toward green steel is no longer optional—it is imperative for both environmental sustainability and economic resilience. As India’s demand for steel continues to rise, the adoption of green hydrogen and CCUS technologies will be crucial for reducing the sector’s carbon footprint. Government-led initiatives, industry collaboration, and technological innovation will define the future trajectory of the steel industry in India.
By embracing these advancements, the Indian steel industry has the potential to set global standards for sustainable production, align with international climate goals, and secure its place in a greener global economy.