High Costs And Infrastructure Gaps Slow India's Shift To Green Steel: EY Report

2025-09-10 02:09:37

(MENAFN- KNN India) New Delhi, Sep 10 (KNN) According to a new EY India report, producing steel with green hydrogen currently costs nearly twice as much as using conventional methods.

This cost disparity-driven by green hydrogen priced at approximately US $4–5 per kilogram-makes low-carbon steel production economically unviable in the absence of subsidies or carbon pricing mechanisms.

Despite India's clear ambition to transition toward green steel, adoption has been sluggish due to several overlapping challenges.

Critical infrastructure such as hydrogen storage, distribution networks, natural gas pipelines, and efficient scrap collection systems remain underdeveloped, curtailing scalable green hydrogen–based steelmaking.

However, EY India sees promise on the horizon. As renewable technologies mature and production scales up, green hydrogen costs could halve by 2030, potentially reducing the financial gap with traditional steelmaking.

Programs like the National Green Hydrogen Mission and other policy incentives are beginning to foster adoption of low-carbon technologies-including hydrogen-based Direct Reduced Iron (DRI), Electric Arc Furnaces (EAF), biochar, and carbon capture, utilisation and storage (CCUS) solutions.

The report also highlights another key hurdle: industry's reluctance to embrace newer, costlier technologies. Many firms await stronger economic incentives or external regulatory pressure-such as the EU's Carbon Border Adjustment Mechanism (CBAM)-before shifting away from familiar steelmaking methods.

In summary, EY India frames the road to green steel production as a balancing act: while India commits to decarbonising its steel sector, market realities and infrastructure constraints remain significant obstacles.

Yet, with supportive policies, technological advances, and economies of scale, green hydrogen–driven steel could become both viable and competitive by the end of the decade.

(KNN Bureau)

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