Record-low green hydrogen prices offer a way out

To accelerate scale-up and exports, India could establish a small number of port-linked Green Steel Acceleration Zones with single-window clearances and priority grid connectivity, alongside reliable clean power, hydrogen infrastructure, risk sharing for first-of-a-kind plants, and an ore and pellet strategy to ensure feedstock readiness at commissioning.

A SECI-style mechanism could be adapted to steel, starting with green hot briquetted iron (HBI) and a near-zero-carbon steel set. Bids could be structured as a transparent premium over a benchmark index, supported by emissions verification and payment security. A 5% public procurement mandate for near-zero steel in government infrastructure projects could create 3–4 million tonnes per year of guaranteed demand, at less than 0.05% of the infrastructure budget.

The strongest justification is domestic: most of India’s steel is consumed internally for roads, railways, housing, and infrastructure. Using green hydrogen instead of imported coal strengthens energy independence, stabilizes project costs, and builds domestic supply chains for electrolysers, storage, solar modules, and electric arc furnaces.

IECC analysis suggests that cost parity between hydrogen-based direct reduced iron (H₂-DRI) steel and blast furnace steel can be reached by around 2030, even if a static comparison in that year shows a modest premium, aided by rupee depreciation dynamics and long-term power-price contracts.

India recorded its lowest ever green hydrogen price of ₹279/kg (about $3.08/kg) in a tender to supply 10,000 tonnes per year to Numaligarh Refinery, roughly one third of prices seen in parts of Europe. At these hydrogen costs, green steel can be produced at the same cost as fossil-based steel, especially given rising coking coal import costs driven by rupee depreciation and coal price inflation.

The article notes that planned blast furnaces would require about 161 million tonnes of coking coal each year, with roughly 90% imported. At $200 per tonne, this implies about $29 billion in annual imports, or around $1.1 trillion over a 40-year plant life, exposing India to global coal-price volatility and carbon-intense production as carbon rules tighten.