As we strive for a sustainable future, the iron and steel industry contributing nearly 9% of global CO₂ emissions faces mounting pressure to decarbonize. For decades, coal has been the backbone of steel production, but the environmental toll is undeniable. With emerging technologies and India’s commitment to clean energy, green hydrogen is being explored as an alternative. Yet, the transition won’t be easy. How can hydrogen realistically become a mainstream fuel in steelmaking, and what needs to happen for the industry to make the shift?
Green hydrogen: A key to carbon-free steel production
Hydrogen offers an effective solution to fully decarbonize steel production, producing only water vapor as a byproduct when used in place of coal. Compared to methane, which only partially reduces emissions, hydrogen brings steel production closer to zero-carbon output. The core challenge, however, lies in scaling hydrogen production to meet industrial demand affordably.
Today’s price levels for green hydrogen make it costlier than coal by about one-third, but this gap is expected to close by 2030 as renewable energy and hydrogen production become more efficient and less expensive.
Lowering costs through innovation
One of the most significant barriers to green hydrogen adoption is cost. Recent technological advances, combined with government-backed projects like India’s National Green Hydrogen Mission, are driving progress. Over the past decade, the production cost of green hydrogen has fallen by 60%, a trend that’s likely to continue as renewable power becomes more accessible. These cost reductions, along with the potential for large-scale hydrogen facilities, could bring hydrogen-based steel production within reach for the industry.
Establishing hydrogen facilities could also help stabilize the grid by producing hydrogen during periods of surplus renewable energy, supporting energy storage and reducing electricity waste. This integrated approach benefits not only the steel industry but also increases the reliability and profitability of renewable power plants, especially those relying on fluctuating sources like wind and solar.
Early pilot projects
India’s National Green Hydrogen Mission, with investment allocation for pilot projects, is an important step ahead in integrating hydrogen into heavy industries. Under this mission, several pilot projects in the steel sector are already underway. These projects, backed by the Ministry of New and Renewable Energy, focus on validating the economic feasibility and performance of hydrogen-based steelmaking processes. By evaluating these pilot results, India can gain insights into the viability of green hydrogen in steel.
The shift from coal to hydrogen in the steel industry is driven by three main factors. First, rising carbon emission costs are making coal-dependent steel production increasingly expensive. As carbon pricing and carbon tax continues to tighten, the cost burden on coal-based processes grows, putting hydrogen as a more economically feasible solution. Second, the expansion of hydrogen production facilities promises to bring down the cost of electrolyzers, making hydrogen production more viable at scale. Finally, the ongoing decline in renewable energy costs supports this transition by lowering the overall price of green hydrogen production, making it an increasingly competitive choice for large-scale industrial applications.
The green hydrogen shift could also lead to a geographic transformation in the steel industry. Historically, steel mills were located near coal mines or ports for easy coal transport. With hydrogen in the equation, renewable energy availability will drive location choices. Nations with strong renewable energy infrastructure, like India, could gain a significant advantage and an upper-hand as hydrogen-based steel becomes more viable. In this way, the transition to hydrogen not only advances environmental goals but also reshapes the industry’s landscape.
India’s path to green steel
India’s steel sector, responsible for 12% of the nation’s CO₂ emissions, stands to benefit greatly from green hydrogen. With each tonne of steel produced in India releasing about 2.55 tonnes of CO₂ well above the global average, the country has an opportunity to drastically reduce its emissions footprint while moving closer to its Aatmanirbhar Bharat goals.
Transitioning the steel industry to hydrogen will be a complex journey, but the groundwork is already being laid. India’s pilot projects, along with sustained investment in renewable energy and hydrogen infrastructure, create a strong foundation for a cleaner future. By 2030, we could see green steel production become a standard practice, helping India gain a competitive edge on the global stage.
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Congrats Mr Sandeep ji, good initiative