Green Steel & Hydrogen-Based Production

Imagine replacing coking coal, the fuel driving India's roughly $1.2 trillion projected import exposure covered elsewhere on this site, with green hydrogen instead, produced from renewable electricity rather than fossil fuel, as the reducing agent that strips oxygen from iron ore, combined with electric arc furnaces, covered elsewhere on this site, rather than traditional blast furnaces, a genuinely different steel-making pathway called hydrogen-based Direct Reduced Iron, H2-DRI, that could eventually make green steel cost-competitive with, or even cheaper than, conventional coal-based steel.

The economic case genuinely depends on hydrogen costs falling considerably further than they currently sit, analysts project green steel could become cheaper than new blast-furnace steel by 2030, and fall below $500 per tonne by 2035, but only if electrolyser costs and efficiency improve enough to bring green hydrogen prices down to roughly $2.5 per kilogram, a target that remains genuinely uncertain rather than already achieved.

India's own official decarbonisation roadmap reflects this genuine uncertainty honestly, projecting coal-based steel production declining from 89% of output in 2030 to just 29% by 2050, reaching net-zero by 2070 through a combination of green hydrogen DRI, scrap-based electric arc furnace production, covered elsewhere on this site, and carbon capture technology, a genuinely gradual, multi-decade transition rather than a rapid near-term shift.

This transition faces a genuine credibility gap worth understanding honestly, India's own green hydrogen production target of 5 million tonnes annually by 2030 appears likely to fall short, with more realistic expectations closer to 3 million tonnes, meaning the steel industry's green transition timeline depends directly on a broader national hydrogen production ambition that is itself currently tracking behind its own target, exactly the kind of interlocking dependency worth watching, since steel decarbonisation genuinely can't outpace the hydrogen supply infrastructure it depends on.