The government has unveiled pilot projects guidelines focused on reducing carbon emissions in the steel industry through the utilisation of green hydrogen as part of the National Green Hydrogen Mission. The Ministry of New and Renewable Energy (MNRE), in conjunction with various initiatives, will execute pilot projects in the steel sector aimed at substituting fossil fuels and fossil fuel-based feedstock with green hydrogen and its by-products. The Ministry of Steel and the designated implementing agencies under this scheme will be responsible for implementing these pilot projects.
The pilot projects in the steel sector will focus on three key areas, namely the utilisation of hydrogen in the direct reduced iron making process, the application of hydrogen in blast furnace operations, and the gradual replacement of fossil fuels with green hydrogen. Additionally, the scheme will provide backing for pilot initiatives exploring innovative applications of hydrogen to decrease carbon emissions in the production of iron and steel. The programme envisions that, given the current elevated costs of green hydrogen, steel plants may initially incorporate a small percentage of green hydrogen into their processes. The blending proportion can then be gradually increased over time as cost-economics improve and technology advances. The guidelines highlight the importance for upcoming steel plants to have the capability to operate using green hydrogen, ensuring their participation in future global low-carbon steel markets. The scheme also takes into account greenfield projects with the goal of achieving 100 per cent green steel.
The programme will be executed with a comprehensive budget allocation of Rs 4.55 billion until the financial year 2029-30. The central financial assistance will be distributed in three phases: 20 per cent upon the issuance of the letter of award, 70 per cent based on project milestones, and the remaining 10 per cent upon completion. The implementation of proposed pilot projects incorporating green hydrogen and its derivatives in the steel sector will contribute to the creation of essential infrastructure for green hydrogen utilisation in the iron and steel industry. This initiative is anticipated to establish a green hydrogen ecosystem within the steel sector. Over time, the adoption of green hydrogen in the steel industry is expected to grow, driven by the anticipated decrease in its production costs.
