India is taking significant steps towards reducing its carbon footprint in the steel industry by launching pilot projects that utilize green hydrogen instead of traditional coking coal. The National Green Hydrogen Mission, launched in January 2023, aims to make India self-reliant through clean energy and contribute to the global clean energy transition.

As part of this mission, the Ministry of New & Renewable Energy (MNRE) has issued guidelines for pilot projects in the steel sector, which will focus on using green hydrogen in various processes to reduce emissions and promote sustainable steel production.

When hydrogen is used in place of coal to make steel, water vapor is produced as opposed to carbon dioxide.

Three processes have been planned so far - the first will produce DRI entirely from hydrogen; the second will inject hydrogen into an already-existing blast furnace; and the third will blend hydrogen and natural gas in an already-existing DRI plant in order to gradually reduce the amount of fossil fuels used.

Coking coal, which emits massive volumes of carbon dioxide in conventional blast furnaces, is nevertheless necessary for the manufacturing of steel. Although electric arc furnaces are less carbon-intensive when utilized in scrap recycling or the last phases of steel manufacturing, their electrical power supply's carbon footprint can still make them extremely polluting.

Globally, the manufacture of steel accounts for 7–9% of the world's yearly CO2 emissions.
The Indian steel industry's average CO2 emission intensity was predicted to decrease from 3.1 T/tcs in 2005 to 2.64 T/tcs by 2020, with a target of 2.4 T/tcs by 2030 (or around 1% annually).

Budget

The budget for these pilot projects is set at ₹455 crores until FY 2029-30. The projects will be implemented through the Ministry of Steel and the implementing agencies nominated under the scheme.

The funding will be disbursed in three stages: 20% upon the award of the letter of contract, 70% upon completion of specific time-bound milestones, and the remaining 10% upon final project completion. Failure to complete projects on time or diversion of funds will result in the refund of the entire grant.

Future

Industry experts estimate that with the right policy support and cost reductions, green steel could enable a 150-million-ton shift from coal-based to hydrogen-based steelmaking in India.  The government's initiatives, including the National Green Hydrogen Mission, are aimed at addressing these barriers and accelerating the adoption of green steel technologies.