India’s steel sector is under pressure to decarbonize, but the route to “green” production will be decided less by futuristic hydrogen plants and more by how efficiently the country can collect, process, and transport steel scrap.
1. Hydrogen: The Long-Term but Costly Bet
- Hydrogen-based DRI promises near-zero emissions but remains commercially unviable before 2035.
- Green hydrogen costs ₹400–450 per kg, and even at ₹150/kg, steelmaking parity remains out of reach.
- Infrastructure demands are steep — large renewable capacity, high-purity water, and new DRI modules.
- A 1 MT hydrogen-based DRI plant could require 250–300 MW of dedicated green power.
| Parameter | Hydrogen-based DRI | Scrap-based EAF/IF |
|---|---|---|
| CO₂ Emission Reduction | 90–95% | 60–65% |
| Power Requirement (kWh/t) | 3,500–4,000 | 600–800 |
| Investment Cost (USD/t capacity) | 1,000–1,200 | 400–450 |
| Commercial Viability | After 2035 | Immediate |
| Feedstock Limitation | Hydrogen availability | Scrap logistics |
2. Scrap: The Immediate Decarbonization Tool
- India consumes 40 MT of scrap annually, producing only ~30 MT domestically and importing the rest.
- Each tonne of scrap saves 1.1 tonnes of iron ore and 630 kg of coal, cutting emissions by up to 1.6 tonnes of CO₂.
- The challenge is not supply but logistics — inconsistent collection, high freight cost, and lack of regional hubs.
- Organized collection and recycling could lift domestic scrap availability to 55–60 MT by 2030.
3. Logistics: The Hidden Carbon Variable
- Nearly 90% of scrap in India moves by road, increasing cost and emissions.
- Rail connectivity to clusters like Raipur, Angul, Bellary, and Vizag can reduce transport emissions by 25–30%.
- Establishing 20 regional scrap aggregation centers could cut logistics cost by ₹1,200–1,500 per tonne.
- Integration with the Vehicle Scrappage Policy can ensure steady feedstock supply.
4. Policy and Economics Aligning with Scrap
- Scrap-based EAF steel costs ₹40,000–43,000 per tonne, already competitive with BF-BOF when carbon cost is added.
- Carbon intensity: 1.2–1.4 tCO₂/t steel (EAF) vs. 2.2–2.5 tCO₂/t (BF-BOF).
- Policy focus on scrap traceability, digital marketplaces, and rail freight incentives could reduce India’s dependency on imported scrap by half by FY30.
5. The Realistic Path to Green Steel
- Hydrogen will define the distant future; scrap will define the immediate one.
- India’s green transition depends on strengthening its recycling, collection, and transport network, not waiting for cheap hydrogen.
- The sooner this ecosystem matures, the faster India can achieve both cost efficiency and emission reduction at scale.
Sources:
- Joint Plant Committee (JPC) Data 2024
- Ministry of Steel – Scrap Policy & Green Steel Roadmap
- ICRA and CRISIL Steel Sector Reports
- IEA Hydrogen Outlook 2024
- NITI Aayog Circular Economy Taskforce
Disclaimer: Data and insights presented in this article are compiled from publicly available industry and policy sources including JPC, IEA, and NITI Aayog. Markintel has independently analyzed and interpreted this information for educational and research purposes; it does not represent the official views of any cited organization.
