Report Forecasts Green Hydrogen to Replace Coal in India’s Steel Production by 2050

Green Hydrogen

According to a joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics, green hydrogen is expected to overtake coal as the dominant fuel source for steel production in India by the year 2050.

The report underscores the urgency of reducing green hydrogen costs and implementing penalties for carbon emissions as pivotal steps to facilitate this transition among Indian steel producers. From 2030 to 2050, the study estimates that 25 to 30 percent of grey hydrogen currently used in the industry will be replaced by green hydrogen, with the percentage expected to increase to 80% by 2050.

Given the nascent state of decarbonization in the steel sector, the report emphasised the critical role that government policy will play in stimulating demand for green steel. Establishing a legal definition for “green steel” was highlighted as a practical measure to guide industry investment in decarbonization efforts.

Vibhuti Garg, Director of South Asia at IEEFA and co-author of the report, stressed the need for policymakers to have a long-term vision that encourages the production of green steel as part of the broader strategy to decarbonize the industry in India.

The study revealed that green steel production costs are nearly double that of traditional steel production methods. To address this issue, the report recommends viability gap funding (VGF) as a means to offset the high initial capital costs associated with adopting low-carbon steelmaking technologies. The government could offer this funding to incentivize steel producers to allocate a portion of their capacity to green steel production.

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The report also highlighted the environmental advantages of green hydrogen over other technologies for reducing emissions in steel production. While renewable-powered electric arc furnaces (EAFs) were presented as an alternative, limitations related to the availability of high-quality scrap were noted.

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