Hourly Clean Power mixed with Green Hydrogen Can Decarbonise India’s Steel at 3% Production Premium: Report

By combining 24/7 carbon-free electricity (CFE) and green hydrogen blending, Indian steelmakers can achieve significant decarbonisation, according to a new report by TransitionZero. This can lead to a reduction in the steel industry’s carbon footprint, while raising production costs by a mere 3%.

Currently, India is the world’s second-largest steel producer and a major driver of global capacity growth. Production is projected to reach 300 million tonnes by 2030. However, the country’s steel sector remains heavily reliant on coal, according to the report. 

The Indian steel industry’s intensity of carbon emissions is 2.54 tonnes of CO₂ per tonne of crude steel — 35% higher than the global average. It accounted for roughly 12% of India’s total national greenhouse gas emissions.

While replacing legacy coal-fired blast furnaces is a long-term challenge, the report highlighted an immediate, high-impact opportunity in secondary steelmaking. Electric arc and induction furnaces (EAF/IF), along with gas-based direct reduced iron (NG-DRI) plants, can be used to reduce carbon footprint. 

Driving decarbonisation

The report examined two key decarbonisation methods in tandem for achieving optimum decarbonisation:

• 70% Hourly-Matched Carbon-Free Electricity (CFE): Matching furnace power demand to clean generation on an hour-by-hour basis, rather than relying on annual averages.

• 20% Green Hydrogen Blending: Injecting green hydrogen into NG-DRI gas streams to offset fossil fuel use.

Individually, both policies require a buildout of renewable energy assets (such as solar and battery storage), which can lead to significant power curtailment, or wasted electricity. Using hourly power-system modelling of India’s grid regions for 2030, the report found that when steel plants and hydrogen electrolysers share clean power procurement in a strategy known as co-optimisation, curtailment can drop by up to 90%.

Redirecting this surplus power leads to improved efficiency, bringing down the levelised cost of hydrogen to approximately ₹290/kg. At the plant level, this translates into a 70% CFE hourly match combined with a 20% green hydrogen blend. This would add just $13 per tonne of crude steel. On a standard production baseline of $450 to $510 per tonne, this represents a modest 3% cost uplift, found the report.

But steelmakers will be able to eliminate a substantial portion of direct and indirect emissions, reduce reliance on imported natural gas, and future-proof their supply chains as a result.

“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,” said Verity Crane, Heavy Industry Lead at TransitionZero.