The cost of producing green hydrogen in India has been steadily declining, and it is projected to touch $2 per kilogram by 2032, according to Abhay Bakre, Director of the National Green Hydrogen Mission. The milestone is expected to play a pivotal role in decarbonising India’s steel sector, which currently relies heavily on fossil fuels.
Decarbonising Hard-to-Abate Sectors
Industries increasingly view green hydrogen as a transformative solution to reduce emissions in hard-to-abate sectors such as steel, refineries, and heavy industries. Presently, India’s steel industry relies largely on coal to power furnaces for producing steel from iron ore. However, Bakre emphasised that scaling green hydrogen requires addressing critical issues such as affordability, long-term offtake, and supportive policies.
EU’s Carbon Border Tax Raises Urgency
From January 1, 2026, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will impose a carbon tax on carbon-intensive imports, including Indian steel and aluminium. This policy shift underscores the urgency for Indian manufacturers to transition to cleaner fuels like green hydrogen to maintain global competitiveness.
Parallels with Solar Energy Transition
Bakre drew a parallel with India’s solar revolution, noting how solar power costs dropped to nearly ₹2 per unit due to large capital investments, long-term offtake commitments, and enabling policies. He expressed confidence that green hydrogen will achieve a similar trajectory of affordability and adoption once the industry resolves early-stage hurdles.
National Green Hydrogen Mission Targets
Launched under the Ministry of New and Renewable Energy (MNRE), the National Green Hydrogen Mission aims to establish India as a global hub for green hydrogen production, use, and export by 2030. The mission has set a target of 5 million tonnes of annual production capacity, backed by strong policy incentives and financial support.
Policy Support Driving Market Confidence
A recent green ammonia tender by the Solar Energy Corporation of India (SECI) highlighted the impact of policy backing, with bids falling to ₹55.75 per kg—a sign of growing confidence in the sector. The Strategic Interventions for Green Hydrogen Transition (SIGHT) programme conducted this tender and provides ₹17,490 crore in financial support until 2029-30 for electrolyser manufacturing and green hydrogen production.
Pilot Projects in the Steel Sector
To accelerate adoption, the government has allocated ₹455 crore for pilot projects in the steel industry under the mission. The Ministry of Steel has already awarded five pilot projects, focusing on:
*Substituting natural gas with hydrogen in Direct Reduced Iron (DRI) production.
*Injecting hydrogen into blast furnaces to reduce coal and coke consumption.
These initiatives aim to demonstrate the feasibility of hydrogen in steelmaking and pave the way for large-scale adoption.
Towards a Low-Carbon Future
Bakre stressed that green hydrogen offers the most feasible pathway for decarbonising India’s steel industry while supporting growth and global trade competitiveness. As reported by business-standard.com, with costs expected to fall sharply by 2032, green hydrogen could soon be on par with brown hydrogen, unlocking a sustainable, affordable, and scalable decarbonisation solution.
