India is accelerating efforts to fund green steel projects, recognising hydrogen as a game-changing alternative to traditional coal methods.

The government is considering various proposals, including the possibility of lower interest rates for green steel ventures. This would involve adjusting existing financing rates, making green steel projects slightly more affordable, notes Kallanish.

In June 2024, the steel ministry has allocated INR 455 crore ($57 million) under the National Green Hydrogen Mission to encourage industry participation.

This funding will support pilot projects using hydrogen in the Direct Reduced Iron process and blast furnaces, aiming to gradually substitute coal with green hydrogen.

A consortium, including labs, IITs, steelmakers, and equipment manufacturers, led by the Institute of Minerals and Management Technology, is set to pilot India's first 100% hydrogen-based dri production.

The government has also asked technology provider Danieli to reduce the cost of a 500,000 tonne/year hydrogen-based DRI plant from INR 800 crore ($96 million) to INR 400 crore ($48 million) to make it more affordable for steel firms.

To further support these initiatives, the government proposes that consortium-led projects could receive up to 70% funding if they meet necessary clearances.

This aligns with India’s broader decarbonisation roadmap, which aims to reduce the steel sector's carbon footprint—currently accounting for 12% of the country's total emissions.

The plan seeks to lower the carbon intensity in steel production by 20% from the current 2.5 tonnes of carbon dioxide per tonne of steel, reflecting a significant move towards sustainable and eco-friendly steel production.