The cost of producing green hydrogen for steelmaking in India is currently nearly double that of conventional methods, but, according to a new Ernst & Young (EY) India report, prices are projected to fall by half by 2030. The decline will be driven by economies of scale, technological advancements and government incentives.
High costs and infrastructure challenges
The EY report highlighted that, although India is committed to green steel transition, the country faces several challenges compared to global peers. High costs - with green hydrogen currently priced at $4–5 per kilogram - make low-carbon steelmaking economically unviable without subsidies or carbon pricing.
Another barrier is limited infrastructure. India lacks sufficient hydrogen storage and distribution networks, efficient scrap collection systems and extensive natural gas pipelines, all of which are critical to scaling up alternative steelmaking technologies.
Policy support and decarbonisation roadmap
Despite these hurdles, India’s National Green Hydrogen Mission and related incentives are pushing adoption of hydrogen-based Direct Reduced Iron (DRI), Electric Arc Furnaces (EAFs), biochar applications, and Carbon Capture, Utilisation and Storage (CCUS) technologies. These initiatives are part of India’s broader steel decarbonisation roadmap, aiming to reduce emissions while maintaining energy security and industrial competitiveness, aligned with the national goal of achieving net-zero steel by 2070.
The report also underlined market challenges and mindset inertia. Indian steelmakers often hesitate to adopt costlier, unfamiliar technologies, relying instead on external drivers such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and domestic policy support like the National Green Hydrogen Mission to accelerate the shift.