Decarbonising India’s Steel Can Cost Just 3% More Through Integrated Clean Power and Green Hydrogen Strategy: Report – Indian PSU

India’s journey towards green steel could be significantly more affordable if clean electricity and green hydrogen are developed together rather than separately, according to a new report released by TransitionZero.

The report, titled “Green Steel, Hour by Hour,” finds that India’s electric and gas-based steelmaking routes can reduce carbon emissions with only an estimated 3% increase in production costs by integrating round-the-clock carbon-free electricity (CFE) and green hydrogen production.

The study examines two critical pathways for decarbonising India’s steel industry:

• Adoption of 24/7 carbon-free electricity for Electric Arc Furnaces (EAFs) and Induction Furnaces (IFs).
• Green hydrogen blending in gas-based Direct Reduced Iron (DRI) production.

According to the report, the greatest economic advantage comes from pursuing both strategies simultaneously. Excess renewable electricity generated to achieve round-the-clock clean power targets, which would otherwise be curtailed, can instead be diverted to produce green hydrogen.

This integrated approach can reduce solar power curtailment by up to 90%, substantially improving renewable energy utilisation while lowering overall decarbonisation costs.

Hourly Modelling for 2030

Using hourly power system modelling across India’s grid regions for the year 2030, the report concludes that combining 70% hourly carbon-free electricity with 20% green hydrogen blending increases steel production costs by only around 3%.

At the same time, the strategy significantly lowers greenhouse gas emissions and reduces the industry’s exposure to international carbon pricing mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM).

Key Findings

• Integrating 24/7 carbon-free electricity and green hydrogen blending is more cost-effective than implementing either solution independently.
• Redirecting surplus renewable power to hydrogen production reduces solar energy curtailment by up to 90%.
• Co-optimising 70% hourly CFE with 20% green hydrogen blending raises production costs by only around 3%.
• The integrated strategy reduces emissions while improving export competitiveness under global carbon regulations such as the EU CBAM.

Industry Perspective

Commenting on the findings, Verity Crane, Heavy Industry Lead at TransitionZero, said India’s steel sector has greater decarbonisation potential than currently recognised. “India’s 43% renewable target for steel understates what the sector can achieve. Moving to 24/7 carbon-free electricity displaces domestic coal, while green hydrogen blending cuts reliance on expensive imported gas. Leading steelmakers are already piloting both levers, but in silos. Integrated planning is the missing piece to unlock the full economic value of green steel.”

The report suggests that coordinated planning of renewable energy infrastructure and hydrogen production could enable India’s steel industry to achieve deeper decarbonisation while maintaining cost competitiveness in an increasingly carbon-conscious global market.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy