<p>Bengaluru: The Indian steel industry can break away from its dependency on coal and cut imports of more than Rs 100 lakh crore (current dollar rates) over the next 40 years if it shifts to green hydrogen, says a new study.</p><p>Researchers at the India Energy and Climate Center, and Energy and Resources Group of the University of California, Berkeley noted that India has set a target of increasing its steel production capacity to 300 million tonnes by 2030-31.</p><p>However, this will require 5.8 billion tonnes of cumulative coking coal imports at a cost of $1.2 trillion (Rs 115 lakh crore) to power the Blast Furnace and Basic Oxygen Furnace (BF-BOF) over a 40-year timeframe. The burning of coal is also estimated to release a cumulative 19.5 gigatonnes of carbon dioxide.</p><p>Green hydrogen, meanwhile, can be produced in India at a cheaper price by 2030, it said. Hydrogen-based direct reduced iron paired with electric arc furnaces (H2-DRI/EAF) will reach about $562/tonne, about 5 per cent above the cost ($536/tonne) of steel produced through the conventional blast furnace (BF-BOF) routes.</p><p>However, considering that hydrogen production is expected to get cheaper, green steel will get cheaper by 2035 below $500/tonne. Green steel also has another advantage in the international market, especially in the European Union where the carbon prices are projected to rise.</p><p>Jose Dominguez Bennett, Neelima Jain and three other researchers argue that India has a "narrow window" to shape where the next wave of steel capacity goes, how it is financed and who captures the trade upside. They took into account India’s low-cost renewable energy resources, inflation of coking coal (over 90 per cent of India's coking coal is imported) and rupee depreciation.</p><p>“India is at a strategic decision point in steel. If future capacity is built around imported coking coal, the country would hardwire currency and price volatility risks into one of its most important industrial sectors. Green steel offers an alternative path," said Neelima Jain, Director for Industrial and Trade Policy at IECC.</p><p>They noted that green steel can be anchored in long-term, fixed-price, rupee-denominated clean power contracts. “Conventional steel depends on imported coking coal priced in dollars. Green steel can be powered by domestic renewable electricity under long-term rupee contracts. Over time, that makes it far more resilient,” Domínguez Bennett noted.</p><p>The study, at the same time, noted that favourable long-term economics alone will not be enough to deliver the initial commercial projects. It called for a "bankable market-creation framework" that includes long-term green steel offtake agreements, credible standards for measuring and verifying emissions, reliable access to clean power and targeted risk-sharing mechanisms for early projects.</p>
<p>Bengaluru: The Indian steel industry can break away from its dependency on coal and cut imports of more than Rs 100 lakh crore (current dollar rates) over the next 40 years if it shifts to green hydrogen, says a new study.</p><p>Researchers at the India Energy and Climate Center, and Energy and Resources Group of the University of California, Berkeley noted that India has set a target of increasing its steel production capacity to 300 million tonnes by 2030-31.</p><p>However, this will require 5.8 billion tonnes of cumulative coking coal imports at a cost of $1.2 trillion (Rs 115 lakh crore) to power the Blast Furnace and Basic Oxygen Furnace (BF-BOF) over a 40-year timeframe. The burning of coal is also estimated to release a cumulative 19.5 gigatonnes of carbon dioxide.</p><p>Green hydrogen, meanwhile, can be produced in India at a cheaper price by 2030, it said. Hydrogen-based direct reduced iron paired with electric arc furnaces (H2-DRI/EAF) will reach about $562/tonne, about 5 per cent above the cost ($536/tonne) of steel produced through the conventional blast furnace (BF-BOF) routes.</p><p>However, considering that hydrogen production is expected to get cheaper, green steel will get cheaper by 2035 below $500/tonne. Green steel also has another advantage in the international market, especially in the European Union where the carbon prices are projected to rise.</p><p>Jose Dominguez Bennett, Neelima Jain and three other researchers argue that India has a "narrow window" to shape where the next wave of steel capacity goes, how it is financed and who captures the trade upside. They took into account India’s low-cost renewable energy resources, inflation of coking coal (over 90 per cent of India's coking coal is imported) and rupee depreciation.</p><p>“India is at a strategic decision point in steel. If future capacity is built around imported coking coal, the country would hardwire currency and price volatility risks into one of its most important industrial sectors. Green steel offers an alternative path," said Neelima Jain, Director for Industrial and Trade Policy at IECC.</p><p>They noted that green steel can be anchored in long-term, fixed-price, rupee-denominated clean power contracts. “Conventional steel depends on imported coking coal priced in dollars. Green steel can be powered by domestic renewable electricity under long-term rupee contracts. Over time, that makes it far more resilient,” Domínguez Bennett noted.</p><p>The study, at the same time, noted that favourable long-term economics alone will not be enough to deliver the initial commercial projects. It called for a "bankable market-creation framework" that includes long-term green steel offtake agreements, credible standards for measuring and verifying emissions, reliable access to clean power and targeted risk-sharing mechanisms for early projects.</p>