India can cut steel emissions before new coal plants lock them in
India's steel sector, which contributes roughly 12% of the country's total carbon emissions, is projected to nearly triple output from around 125 million tonnes today toward an estimated 300 million tonnes of installed capacity by 2030-31 to meet growing demand.
About 92% of this planned capacity expansion has not yet been built, meaning technology choices made now (coal-based blast furnace-basic oxygen furnace route versus green hydrogen or scrap-based routes) will lock in emission trajectories for the next 30-40 years given the multi-decade life of steel plants.
A report warned that continuing to expand coal-dependent steelmaking could entrench dependence on imported coking coal and create large volumes of future stranded assets and cumulative emissions.
Green hydrogen, produced via electrolysis using renewable power, is flagged as the most promising decarbonisation pathway for "hard-to-abate" steelmaking, alongside greater use of scrap-based secondary steel production; a domestic industrial-scale pilot has already demonstrated technical feasibility.
Barriers remain: limited availability of affordable green hydrogen, insufficient dedicated renewable power for industrial use, and the absence of a strong domestic carbon price to make low-carbon steel cost-competitive.
Green Hydrogen and the National Green Hydrogen Mission
Green hydrogen is hydrogen produced by electrolysis of water using renewable electricity, distinguishing it from "grey" hydrogen (from natural gas) and "blue" hydrogen (fossil-based with carbon capture). It is central to decarbonising "hard-to-abate" sectors like steel, cement, and heavy transport, where direct electrification is difficult because these processes need hydrogen as a reducing agent or high-temperature heat source, not just power.
Key Details
- The National Green Hydrogen Mission was approved by the Union Cabinet on 4 January 2023 with an initial outlay of ₹19,744 crore, nodal ministry: Ministry of New and Renewable Energy (MNRE).
- Target: 5 million metric tonnes (MMT) per annum of green hydrogen production capacity by 2030, aiming to make India a global export hub.
- Outlay break-up includes ₹17,490 crore for the SIGHT (Strategic Interventions for Green Hydrogen Transition) programme incentivising electrolyser manufacturing and green hydrogen production.
Green hydrogen-based direct reduced iron (DRI) is the pathway that lets steelmakers replace coking coal as a reducing agent; the Mission's SIGHT incentives and falling projected costs (green hydrogen estimated to reach around $3/kg by 2030) are what could make green steel commercially viable before new coal-based capacity is locked in.
Green Steel Taxonomy and Emission Intensity Norms
To prevent "greenwashing" and give green steel a market identity, the government has been developing a Green Steel Taxonomy that classifies steel by embodied carbon intensity (tonnes of CO2 per tonne of crude steel) into bands, alongside a broader Green Steel policy roadmap for the sector's long-term decarbonisation.
Key Details
- The steel sector is also covered under the Perform, Achieve and Trade (PAT) scheme of the Bureau of Energy Efficiency, which sets mandatory energy/emission-intensity reduction targets for large energy-intensive industrial units, including steel plants.
- International experience suggests near-zero-emission steel becomes cost-competitive with conventional steel only when carbon prices approach roughly $90-100 per tonne of CO2, well above India's current carbon pricing levels.
- The Ministry of Steel has also constituted a Task Force on Green Steel to align production incentives with decarbonisation.
The taxonomy and PAT targets are the regulatory scaffolding that would let a future carbon market (see CCTS bridge) or green public procurement policy reward low-carbon steel, giving producers a financial reason to choose the hydrogen route over new coal capacity now, rather than retrofitting later at higher cost.
Carbon Lock-in and Stranded Assets
"Carbon lock-in" refers to how large, long-lived capital investments in emission-intensive infrastructure (like blast furnaces with 30-40 year operational lives) constrain a country's future decarbonisation options, because early retirement of that infrastructure means writing off unrecovered investment, i.e., creating "stranded assets."
Key Details
- India is the world's second-largest crude steel producer (after China), with roughly 125-149 million tonnes of annual output in recent years.
- A study estimated that continued reliance on coal-based expansion could entail import risk running into trillions of rupees in coking coal costs over coming decades if the low-carbon transition is delayed.
- The EU's Carbon Border Adjustment Mechanism (CBAM), which taxes the embedded carbon in imports such as steel, creates an external trade pressure pushing exporters toward lower-carbon production methods.
The lock-in argument is the crux of the article's framing — because 92% of India's steel capacity growth is yet to be built, the "before new coal plants lock them in" window is the limited period during which India can choose the green hydrogen/scrap route over conventional coal-based expansion.
- India's steel sector: ~12% of national carbon emissions; second-largest global crude steel producer.
- Capacity target: ~300 million tonnes installed steelmaking capacity by 2030-31, up from ~180-200 million tonnes; 92% of this expansion not yet built.
- National Green Hydrogen Mission: approved 4 January 2023; outlay ₹19,744 crore; target 5 MMT/year green hydrogen by 2030; nodal ministry MNRE.
- Green hydrogen production cost projected to fall to around $3/kg by 2030 in India.
- Carbon price threshold for cost-competitive near-zero steel internationally: approximately $90-100/tonne CO2.