Green Steel in India: The Favored Technologies, Cost Analysis and Policies – By Aniket Choudhari 

Key Takeaways 

• Green steel in India is defined as finished steel produced with an emissions intensity below 2.2 tCO₂e per tonne of finished steel.
• The taxonomy has three ratings: five-star below 1.6 tCO₂e/tfs, four-star between 1.6 and 2.0, and three-star between 2.0 and 2.2. 
• During FY2025–26, 90 steel units received green-steel certification, representing 12.4 million tonnes of production. 
• Green certification does not mean that steel is fossil-free or near-zero-emissions. The production route, measured emissions and accounting boundary still matter. 
• India is supporting six hydrogen pilot projects for steelmaking, with ₹455 crore allocated for steel-sector pilots through FY2029–30. 
• Scrap-based electric furnaces, hydrogen-based direct reduced iron, cleaner electricity, efficiency measures and carbon capture can all reduce emissions, but they address different parts of the steelmaking process. 
• A 2026 Berkeley study estimates hydrogen-based DRI and electric-furnace steel at about US$562/t in a 2030 base case, compared with US$536/t for a new conventional BF-BOF plant, assuming hydrogen at US$3/kg. These are modelled production costs, not current market prices. 
• The EU Carbon Border Adjustment Mechanism, or CBAM, entered its definitive regime on 1 January 2026. Indian green-steel certification does not replace the emissions information required for covered exports to the EU. 
• The most useful way to assess green steel in India is to ask four questions: Which production route? What measured emissions? Under which accounting boundary? At what project stage? 
  

About the Author 

Aniket Choudhari is the Senior Manager of Business Development at Stargate Hydrogen. With a decade of experience in the Indian energy landscape, he worked on techno-commercial assessments for electrolyser and fuel cell technologies, supporting their deployment across industries.

Aniket spent years in the automotive sector and served as the Manager for International Investment Promotion for a German region in India, where he facilitated cross-border investments, industrial collaborations and technology partnerships. He holds a master’s degree in Process Engineering and Energy Technology from the University of Applied Sciences Bremerhaven, Germany. 

Intro 

Green steel in India is moving from policy into certification, industrial projects and hydrogen pilots. But “green steel” can describe vastly different levels of emissions reduction. This article explains what qualifies as green steel in India, how it can be produced, what it may cost, which projects are moving forward, and what buyers should check before accepting a green-steel claim. 

How Is Green Steel Manufactured in India? 

There is no single green-steel production process. 

A steel plant can lower its emissions through efficiency improvements, cleaner electricity, increased scrap use, alternative reducing agents, hydrogen or carbon capture. The depth of emissions reduction depends on which source of emissions the technology addresses. 

1. Energy Efficiency and Cleaner Electricity 

Steel plants consume large amounts of energy across material preparation, ironmaking, melting, casting and rolling. 

Waste-heat recovery, more efficient equipment, process control and lower-carbon electricity can reduce emissions without replacing the plant's main production route. 

These measures can provide practical reductions, particularly at existing facilities. Their limitation is equally important: improving energy use does not remove the carbon involved when coal, coke or another fossil fuel remains the reducing agent in ironmaking. 

2. Scrap-Based Electric Arc Furnaces 

An electric arc furnace (EAF) uses electricity to melt metallic inputs. When the input is steel scrap, the process recycles metal that has already been produced rather than reducing fresh iron ore. 

This can reduce emissions substantially when suitable scrap and low-carbon electricity are available.  But an EAF is not automatically green. 

Its emissions depend on factors such as: 

• Carbon intensity of the electricity supply, 
• Proportion and quality of scrap, 
• Other metallic inputs, 
• Fuels and consumables used at the plant, 
• Accounting boundary applied to the final emissions figure. 

Scrap availability and quality also affect how widely this route can be applied to particular steel grades. 

3. Natural-Gas-Based DRI 

Direct reduced iron (DRI), also known as sponge iron, is produced by removing oxygen from iron ore without melting the ore in a blast furnace. 

DRI can then provide metallic feed for subsequent steelmaking. 

Natural-gas-based DRI avoids some of the coal and coke use associated with conventional blast-furnace production. But natural gas remains a fossil fuel, so lower-emissions DRI should not automatically be described as fossil-free steel. 

4. Hydrogen-Based DRI and Electric Melting 

Hydrogen-based DRI changes the chemistry of iron-ore reduction. 

Instead of relying primarily on carbon to remove oxygen from iron ore, hydrogen acts as the reducing agent. The resulting DRI can then be melted using an electric furnace. 

For very deep emissions reductions, the hydrogen itself needs to be produced with low emissions and the electricity used across hydrogen production and steelmaking needs to be correspondingly clean. 

The simplified process looks like this: 

Renewable electricity → Electrolyser → Green hydrogen → DRI plant → Electric melting → Steel 

This is where electrolysis becomes directly relevant to steelmaking. 

An electrolyser uses electricity to split water into hydrogen and oxygen. When the electricity meets the applicable renewable or low-emissions requirements, the resulting hydrogen can replace fossil reducing agents in suitable steelmaking processes. 

The engineering question is therefore much bigger than simply installing an electrolyser. 

A hydrogen-based steel project needs to match: 

• Required hydrogen flow and purity, 
• Electrolyser capacity, 
• Renewable-electricity availability, 
• Electrolyser operating hours, 
• Hydrogen storage or buffering, 
• Compression and delivery pressure, 
• Water supply and treatment, 
• DRI plant requirements, 
• Electrical infrastructure, 
• Emissions intensity required from the final steel product. 
  

The economics of the electrolyser and its electricity supply then feed directly into the cost of hydrogen and, in turn, the cost of hydrogen-based steel. 

This is also why partial hydrogen substitution and predominantly hydrogen-based DRI should not be treated as the same achievement. 

Replacing part of an existing reducing gas with hydrogen can lower emissions and provide operating experience. A production route designed around high hydrogen shares has a different emissions profile, infrastructure requirement and investment case. 

5. Carbon Capture, Utilisation and Storage 

Carbon capture, utilisation and storage, or CCUS, takes a different approach. 

Instead of removing carbon from the production route entirely, capture equipment separates some CO₂ from process gases so that it can potentially be stored or used elsewhere. 

The quality of a CCUS claim depends on questions such as the capture rate, additional energy consumption, plant-level emissions and the eventual destination of captured CO₂. 

A project should therefore be assessed on measured results rather than on the presence of capture equipment alone.  

What Is the Current Situation with Green Steel in India? 

India now has an official answer to that question. 

The Ministry of Steel released the Green Steel Taxonomy for India on 12 December 2024, followed by a gazette notification on 23 December 2024. Under the framework, steel qualifies for a green rating when its carbon-dioxide-equivalent emissions intensity is below 2.2 tons per ton of finished steel, or 2.2 tCO₂e/tfs. 

tCO₂e stands for metric tons of carbon dioxide equivalent, which is the standard unit of measurement used to gauge and combine the warming impact of different greenhouse gases 

The taxonomy divides qualifying production into three levels: 

The National Institute of Secondary Steel Technology (NISST) is the nodal body responsible for measurement, reporting and verification, commonly shortened to MRV, as well as issuing certificates and star ratings. Certificates identify the plant, embodied emissions at the finished-steel stage, the rating, greenness percentage and certified quantity. 

There is an important qualification. 

India's taxonomy includes Scope 1 emissions, Scope 2 emissions and selected Scope 3 emissions up to finished-steel production. It excludes upstream mining, downstream emissions and transportation emissions inside and outside the steel plant. 

A green rating should therefore be understood as certification against a defined Indian emissions methodology, rather than a complete lifecycle assessment. 

That distinction matters. Steel can qualify as green under the Indian taxonomy while still involving fossil fuels somewhere in its production route. Certification demonstrates that the product falls below a specified emissions threshold. It does not automatically demonstrate fossil-free or near-zero-emissions steelmaking. 

How Much Green Steel in India is Being Produced? 

India has moved beyond having a taxonomy on paper. 

According to the Ministry of Steel, 90 steel units were awarded green-steel certification during FY2025–26, accounting for 12.4 million tonnes of green-steel production under the notified framework. 

That is useful evidence that the certification system is being used commercially. 

It should not, however, be interpreted as 12.4 million tonnes of fossil-free steel. 

The figure represents production that meets India's taxonomy requirements. Different certified plants and products can achieve their ratings through different combinations of production technology, energy supply, raw materials and operating improvements. 

This distinction becomes even more relevant when India's overall steel expansion is considered. 

Government figures for FY2025–26 put crude-steel production at 170.15 million tonnes and annual crude-steel capacity at 220.41 million tonnes. The National Steel Policy sets objectives of 300 million tonnes of capacity and 255 million tonnes of production by 2030–31. 

These are production and capacity objectives, not forecasts. 

They also expose one of the central challenges facing green steel in India: emissions intensity and total emissions are not the same thing. 

A plant can reduce the amount of CO₂ emitted per tonne while total emissions continue to rise if steel production grows faster than emissions intensity falls. 

India therefore has two related tasks: making each tonne cleaner and determining how deeply new production capacity can reduce dependence on carbon-intensive steelmaking. 

Which Green Steel Technology Best Fits Which Project? 

The routes solve different problems, which makes a direct comparison useful. 

For procurement and project development, the correct question is rarely “Which technology is green?” 

A better question is: Which production route can achieve the required emissions intensity at this site, with the available feedstock, energy supply and project economics? 

What Is Being Done to Support Hydrogen-Based Green Steel in India? 

Hydrogen is already part of India's steel-sector policy programme, but most government-supported activity remains at pilot scale. 

The Ministry of Steel reports an allocation of ₹455 crore through FY2029–30 for hydrogen pilot projects in the steel sector. As of 7 September 2026, six projects had been awarded. 

The program covers several approaches: 

• Producing DRI using 100% hydrogen in a vertical shaft, 
• Injecting hydrogen into blast furnaces to reduce coal and coke consumption, 
• Partially replacing natural gas or other reducing gases with hydrogen in DRI production, 
• Other technology approaches aimed at reducing steel-sector carbon emissions. 

These categories are useful because they show that hydrogen steel in India does not describe one type of project. 

Some projects are testing hydrogen as a partial substitute within an existing process. Others are intended to test production routes in which hydrogen performs the main reduction function. 

The project stage matters just as much as the technology. 

“Pilot awarded,” “under construction,” “commissioned,” and “producing verified commercial output” describe different levels of evidence. 

How Much Does Green Steel in India Cost? 

There is no single current “green steel price” for India. 

The answer depends on what type of green steel is being produced, the plant configuration, energy contracts, feedstock, financing and the emissions level the project is expected to achieve. 

A useful reference comes from the India Energy and Climate Center at the University of California, Berkeley, which published a techno-economic analysis in May 2026. 

Under its 2030 base-case assumptions, the study estimates: 

The hydrogen case assumes delivered green hydrogen at approximately US$3/kg. 

This does not mean green steel in India currently costs only 5% more in India. 

The figures are modelled production costs for 2030 under defined assumptions. They are not current transaction prices, and the analysis assumes a mature repeat-build plant rather than assigning all first-project risks to the modelled facility. 

That distinction is especially relevant for investment decisions.  If you want to know more about risk mitigation for hydrogen projects in India, read more here.

What Drives the Cost of Hydrogen-Based Green Steel in India? 

Hydrogen is one of the largest variables. 

If a plant for green steel in India requires around-the-clock hydrogen but the electrolyser is supplied by variable renewable generation, the project needs a strategy for matching hydrogen production with DRI consumption. 

Possible approaches include oversizing renewable generation, changing electrolyser utilisation, using grid electricity where rules and emissions requirements allow, storing hydrogen, or combining several methods. 

Each option affects cost. 

The commercial model therefore needs to test at least five areas: 

1. Electricity 

What is the delivered cost of electricity after generation, transmission, access charges and other applicable costs? 

2. Electrolyser Utilisation 

How many hours per year will the electrolyser operate, and how does that utilisation affect the cost per kilogram of hydrogen? 

3. Hydrogen Delivery 

What pressure and flow does the DRI process require? Is storage needed? What compression and balance-of-plant equipment is required? 

4. Feedstock 

Can the project secure iron ore or pellets with the properties required by the selected DRI technology, at the expected scale and cost? 

5. Financing and Offtake 

How will lenders price technology and construction risk, and is there a long-term offtake agreement, meaning a contract for customers to purchase the resulting output? 

These questions determine whether a technically workable green-steel project becomes commercially workable. 

Green Steel in India Is Not Only a Large-Producer Question 

Large integrated producers receive much of the attention, but India's steel industry also includes a substantial network of smaller producers and industrial clusters. 

A June 2026 study by the Council on Energy, Environment and Water (CEEW) examined five industrial clusters and highlighted the role of coal-based DRI among smaller steel producers. CEEW estimates that coal-based DRI accounts for almost 30% of Indian crude-steel production and reports emissions of around 2.7 to 3.1 tCO₂ per tonne of crude steel for this route. 

The study identifies measures such as waste-heat recovery and increased scrap use that can provide cost-saving opportunities in the clusters assessed. Renewable-energy economics vary according to local electricity prices and access charges. 

This matters for how the term “secondary steel” is used. 

Secondary production in India should not automatically be interpreted as 100% recycled, scrap-based steel. Some producers use coal-based DRI as a metallic input. 

A realistic green steel India strategy therefore has to account for both large integrated plants and smaller production clusters. 

What Is Holding Back Green Steel in India? 

The technical options are becoming better understood. Commercial deployment still depends on several linked constraints. 

Low-Cost, Low-Emissions Energy 

Hydrogen-based DRI requires substantial hydrogen supply, while both electrolysis and electric steelmaking require electricity. 

The cost and carbon intensity of that electricity affect both project economics and final steel emissions. 

Hydrogen Infrastructure 

A steel plant needs hydrogen when its process needs hydrogen, not simply when renewable generation is available. 

Production profiles, storage, compression, pipelines and plant integration therefore need to be engineered as one system. 

Suitable Iron Ore and Pellets 

Hydrogen-based shaft-furnace DRI places requirements on iron-bearing feedstock. Ore beneficiation and pellet production can therefore become part of the project scope rather than an external assumption. 

Scrap Availability and Quality 

Scrap-based EAF production offers another lower-emissions route, but the volume, quality and collection of suitable scrap influence how much production can use this pathway. 

Financing First Projects 

A mature technology cost estimate does not remove construction, integration and operating risk from the first projects. 

Lenders and investors need confidence in equipment performance, feedstock, energy supply, project execution and customer demand. 

Buyers Willing to Contract for Low-Emissions Steel 

A green premium is the extra price a buyer pays for steel with lower emissions compared with a comparable conventional product. 

Production cost, selling price and willingness to pay are three different numbers. 

Long-term purchasing agreements can be particularly useful because they convert general interest in lower-emissions materials into predictable demand that can support project financing. 

How Will CBAM Affect Indian Steel Exports? 

The EU's Carbon Border Adjustment Mechanism (CBAM) is making embedded-emissions information commercially relevant for steel supplied to Europe. 

CBAM entered its definitive regime on 1 January 2026 and covers sectors including iron and steel. EU importers, or their indirect customs representatives where applicable, carry the formal obligations for declaring covered imports and surrendering the corresponding CBAM certificates. 

Certificate purchasing begins in February 2027, including certificates associated with covered imports made during 2026. 

For Indian steel suppliers, the commercial consequence is straightforward: customers importing covered products into the EU need reliable embedded-emissions information. 

An Indian green-steel certificate does not automatically provide a zero CBAM obligation. 

India's Green Steel Taxonomy and the EU's CBAM have separate purposes, boundaries and calculation requirements. A steel product can qualify for an Indian green rating while still having emissions that matter under CBAM. 

The applicable EU product classification, embedded emissions, verification requirements, benchmarks, carbon prices and any permitted adjustments need to be assessed under the current CBAM rules. 

This is why plant-specific claims such as “CBAM will add X% to Indian steel” should be treated carefully unless the underlying product and emissions data are known. 

Planning Hydrogen Supply in a Project for Green Steel in India? 

For hydrogen-based DRI, the electrolyser cannot be assessed separately from the steel plant. Hydrogen demand, renewable-power availability, operating profile, pressure, storage, water supply and DRI requirements all influence electrolyser sizing and the final cost of hydrogen. 

Stargate Hydrogen develops industrial alkaline electrolyser systems for large-scale renewable-hydrogen production.

If you are assessing hydrogen-based DRI, hydrogen injection or on-site hydrogen production for a steel project in India, contact our team to discuss the hydrogen requirement, power profile and electrolyser configuration for your project.