Green steel can help India avoid $1 trillion coking coal import burden: Report

Mumbai: India’s next phase of steel expansion could lock the country into nearly $1 trillion in coking coal import costs over the coming decades unless it shifts towards green steel production, according to a study by the India Energy and Climate Center (IECC) at the University of California, Berkeley.

The report said India is expected to roughly double its steelmaking capacity over the next decade. If much of this expansion follows the conventional blast furnace route, the country could end up importing nearly 6 billion tonnes of coking coal over a 40-year period, exposing the sector to global commodity price swings and currency volatility.

The study argued that green steel offers a strategic alternative by reducing import dependence, lowering exposure to external market shocks and strengthening India’s competitiveness in global export markets that are increasingly favouring low-emission industrial products.

“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.

According to the report, India’s abundant and relatively low-cost renewable energy resources provide a strong foundation for domestic green hydrogen and green steel production, where hydrogen replaces coking coal in iron-making.

The study projected that by 2030, green hydrogen could be produced in India at around US$3 per kilogram, enabling green steel production at nearly US$562 per tonne — only about 5-10 per cent higher than conventional steel produced from new plants.

Researchers noted that unlike coking coal, which is imported and priced in US dollars, green steel production can be linked to long-term, fixed-price renewable energy contracts denominated in rupees. This, they said, could make the sector more stable and resilient over time.

“A static cost comparison misses the central economic point. 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,” said Jose Dominguez, Research Manager at IECC.

The report added that accounting for differences in cost structure and risk exposure, green steel in India could achieve cost parity with — or even become cheaper than — conventional steel by around 2030.