Transitioning to green steel
A detailed analysis argues that India's transition to green steel is now both technically feasible and economically viable, with the "green premium" — the extra cost of low-carbon steel — manageable and declining rapidly as green hydrogen costs fall and renewable energy prices drop.
The article cites market readiness signals: major steel consumers (automakers, construction companies, infrastructure developers) are increasingly willing to pay a modest premium for certified green steel, driven by ESG mandates, supply chain decarbonisation commitments, and anticipation of EU CBAM-equivalent requirements spreading globally.
Green steel production in India is centred on the hydrogen-based Direct Reduced Iron (H-DRI) + Electric Arc Furnace (EAF) route, which can reduce steelmaking emissions by up to 97% versus the incumbent blast furnace-basic oxygen furnace (BF-BOF) route.
JSW Steel has commissioned India's first commercial-scale green hydrogen plant (25 MW electrolyser, producing ~3,800 tonnes of H₂ per annum) at its Vijayanagar facility, backed by a seven-year offtake agreement under the government's SIGHT (Strategic Interventions for Green Hydrogen Transition) programme.
Policy enablers include: the National Green Steel Mission (targeting emissions intensity of 2.20 t CO₂/t steel by 2029-30), Green Steel Public Procurement Policy (from FY28), and the National Green Hydrogen Mission (5 MTPA by 2030).
Green Steel Technology: The H-DRI EAF Production Route
The shift from conventional to green steel involves fundamentally restructuring the production process to eliminate fossil fuel combustion — a change relevant to both GS3 Science & Technology and Environment sections.
Key Details
- Conventional BF-BOF route: Iron ore is reduced in a blast furnace using metallurgical coal (coke) at ~1,600°C. This produces pig iron, which is then refined in a Basic Oxygen Furnace (BOF). Emissions: approximately 2.5-3.5 tonnes CO₂ per tonne of steel — the global average is ~1.85 t CO₂/t steel.
- Green H-DRI EAF route: Hydrogen (from green sources — water electrolysis using renewable electricity) reduces iron ore in a shaft furnace at lower temperatures (600-900°C), producing sponge iron (Direct Reduced Iron / DRI) without CO₂ emissions (only water vapour). The DRI is then melted in an Electric Arc Furnace (EAF) powered by renewable electricity. Emissions: ~0.3-0.5 t CO₂/t steel (85-97% reduction).
- Intermediate pathway: "Hydrogen blending in gas-based DRI" — India's existing gas-based DRI plants (India has large DRI capacity from the 1990s) can blend hydrogen with natural gas to partially reduce emissions while full H₂ production scales up.
- Electrolyser requirement: Producing 1 tonne of DRI-EAF steel requires ~70-80 kg of hydrogen; at current green hydrogen prices of ~$6-7/kg, this adds ~$500/tonne to production costs compared to ~$200/tonne for traditional coking coal.
The article's assertion that the "green premium is manageable" is based on projections of green hydrogen cost declining to $1-2/kg by 2030 — at which point H-DRI EAF becomes cost-competitive with BF-BOF. India's timing of policy and investment decisions in the next 3-5 years is therefore critical.
India's Existing Steel Industry and DRI Advantage
India has a unique structural advantage in the green steel transition that is rarely highlighted: it is already the world's largest DRI-producing country, having built extensive gas-based DRI capacity since the 1990s.
Key Details
- India produces approximately 30-35 million tonnes of DRI per annum — the largest in the world — primarily using natural gas or coal in shaft furnaces.
- This existing DRI infrastructure can be upgraded to accept hydrogen blends or converted fully to green hydrogen as costs decline — giving India a significant first-mover infrastructure advantage versus China (which is predominantly BF-BOF).
- India's steelmaking mix: ~57% BF-BOF (coal-based) + ~43% EAF/Induction Furnace (IF) routes. The large EAF/IF base can increasingly use green electricity as India's grid decarbonises.
- National Steel Policy 2017 target: 300 MTPA crude steel capacity by 2030-31 (from ~144 MTPA in FY24) — the scale-up itself must be predominantly green to avoid locking in high-carbon assets.
- Emissions targets: National Green Steel Mission aims to reduce average emissions intensity from ~2.65 t CO₂/t steel to 2.20 t CO₂/t steel by 2029-30.
India's DRI infrastructure advantage, combined with declining renewable energy costs (solar now among cheapest globally at ~₹2-3/kWh) and falling electrolyser prices, makes the green steel transition technically credible — supporting the article's "technology exists" argument.
National Green Hydrogen Mission and SIGHT Programme
The National Green Hydrogen Mission (NGHM), launched in January 2023, is the primary policy vehicle for enabling India's transition to hydrogen-based industrial processes, including green steel.
Key Details
- NGHM target: 5 million tonnes per annum (MTPA) of green hydrogen production by 2030 (revised expectations: ~3 MTPA given infrastructure and cost challenges).
- Total investment envisaged: approximately ₹8 lakh crore ($96 billion) by 2030, creating an estimated 6 lakh jobs.
- SIGHT Programme (Strategic Interventions for Green Hydrogen Transition): Two financial incentive components — Manufacturing Incentive (for electrolyser manufacturing) and Production Incentive (for green hydrogen production). JSW's Vijayanagar plant operates under this scheme.
- Electrolyser manufacturing: India aims to develop 5 GW+ per annum domestic electrolyser manufacturing capacity by 2030 (current: less than 1 GW).
- Green hydrogen cost trajectory: India's target is $1/kg by 2030 (currently $4-7/kg); competition threshold vs. grey hydrogen is approximately $1-2/kg.
The SIGHT programme's production incentives are what make pilot-scale green hydrogen steel projects (like JSW Vijayanagar) commercially viable at current prices — bridging the gap until market-driven economics take over at scale.
- Conventional BF-BOF emissions: ~2.5-3.5 t CO₂/t steel (world average ~1.85 t CO₂/t steel).
- Green H-DRI EAF emissions: ~0.3-0.5 t CO₂/t steel (85-97% reduction).
- Green hydrogen requirement per tonne of DRI-EAF steel: ~70-80 kg.
- Current green hydrogen cost: ~$4-7/kg (target: $1/kg by 2030); current grey hydrogen: ~$1-2/kg.
- Green premium: ~$300-500/tonne of steel at current hydrogen prices.
- India's DRI production: ~30-35 MTPA (world's largest DRI producer) — hydrogen-upgradeable.
- National Green Hydrogen Mission (January 2023): 5 MTPA target by 2030; revised to ~3 MTPA.
- NGHM investment envisioned: ~₹8 lakh crore ($96 billion) by 2030.
- JSW Vijayanagar: India's first commercial-scale green hydrogen plant (25 MW electrolyser, ~3,800 tpa H₂); seven-year offtake under SIGHT.
- SAIL: Partnered with Primetals Technologies for hydrogen injection at Bokaro blast furnace (December 2025).
- National Green Steel Mission: Reduce emissions intensity from ~2.65 to 2.20 t CO₂/t steel by 2029-30.
- Green Steel Public Procurement Policy: From FY28 — government procurement preference for certified green steel.
- India's steelmaking mix: ~57% BF-BOF + ~43% EAF/IF; target 300 MTPA capacity by 2030-31.
- EU CBAM carbon cost for Indian HRC: ~€269.78/tonne (default values) — primary driver for green steel market demand.