The transition towards green steel has become one of the major topics in the steel industry. This whitepaper “Role of Green Hydrogen in Indian Steel Sector” has been prepared by Ernst & Young (EY)-Parthenon in collaboration with WWF-India.
Analysis in the whitepaper shows, under India’s 2070 net zero scenario, the green H2-DRI and electric arc furnace (EAF) route is expected to contribute 13% of the projected 403 MMTPA crude steel output by FY50, growing to 41% of 597 MMTPA by FY70. Green hydrogen demand in the steel sector is expected to grow at a 13% CAGR, reaching 15.15 MMTPA by FY70. In the accelerated net-zero 2050 scenario, H2-DRI steelmaking route shall contribute to 39% of the crude steel production with green hydrogen demand of 9.82 MMTPA by FY50.
Analysis shows, to achieve a 245 MMTPA H2-DRI capacity by 2070, investments of US$297-US$304 billion are needed. While initial costs for H2-DRI plants are higher than those for BF-BOF setups, falling green hydrogen prices-projected to drop from US$7/kg in 2024 to US$1.8/kg by 2040—and rising global carbon prices are expected to improve the cost competitiveness of H2-DRI by 2035.
The production costs of steelmaking via the green hydrogen DRI-EAF route, by which a 90% reduction in emissions can be achieved, are anticipated to decrease from US$600/ton in 2024 to US$421/ ton by 2040, making this a viable and sustainable alternative to traditional steelmaking.
The paper concludes that India’s commitment to green hydrogen presents a transformative opportunity to decarbonize its steel sector, a major emitter of global CO2 emissions. Addressing economic, technological, and logistical challenges through strategic interventions will enable India to lead the global transition to sustainable steel production. This effort supports broader goals of industrial innovation, energy security, and climate action, ensuring long-term competitiveness and environmental sustainability.
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