Green Hydrogen To Become Primary Fuel For Steelmaking In India By 2050: Report

Green hydrogen is projected to supplant coal as the primary fuel for steel production in India by 2050, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics. 

The report outlined the need for a reduction in the cost of green hydrogen and the implementation of carbon emissions penalties to encourage Indian steelmakers to transition to hydrogen-based steel manufacturing. 

From 2030 to 2050, the report estimated that the steel industry will replace approximately 25 to 30 per cent of its grey hydrogen consumption with green hydrogen. This proportion is anticipated to rise to 80 per cent by the year 2050. 

Given the fledgling state of decarbonisation efforts in the steel industry, the report emphasised the importance of government policies that stimulate demand for green steel. 

It suggested that establishing a legal definition for green steel can serve as a guideline for industry investments in decarbonisation initiatives. 

Vibhuti Garg, Director, South Asia, IEEFA and the co-author of this report said that it is important for decarbonising steel production in India to have a vision for the policymakers whereby they can encourage the production of green steel.

The report stated that green steel costs nearly twice that of traditionally produced steel. It also recommended viability gap funding (VGF) to help bridge the gap due to the high initial capital cost of low-carbon steelmaking technology. 

It noted that the government can provide this VGF to urge steelmakers to commit part of their capacity to green steel manufacturing. The report highlighted that green hydrogen stands out as the most environmentally friendly choice for reducing emissions in steel production when compared to other technologies. 

It added that an alternative approach involves using renewable-powered electric arc furnaces (EAFs) to produce steel from scrap. However, this method has limitations due to the availability of high-quality scrap.