TERI and Transition Asia on its study assesses H₂-DRI costs, renewable power requirements, CBAM impact and policy measures for commercial-scale deployment.
October 05, 2026. By News Bureau
The Energy and Resources Institute (TERI) and Transition Asia has released a study, ‘Is Green Steel within reach in India? Green DRI Economics, Policy Drivers and Site Feasibility in Andhra Pradesh,’ at a stakeholder workshop held here. The report presents a techno-economic analysis of deploying commercial-scale Hydrogen-based Direct Reduced Iron (H₂-DRI) technology in the state, examining production pathways, renewable energy integration, infrastructure needs, costs and the policy interventions required to make green steel commercially viable.
The workshop brought together senior officials from the Government of Andhra Pradesh, state power utilities, industry leaders from the steel, energy and technology sectors, and academia to discuss the report’s findings and validate its recommendations.
The global iron and steel sector contributes nearly 7–8 percent of energy-related CO₂ emissions, making it one of the hardest sectors to decarbonise. With the European Union’s Carbon Border Adjustment Mechanism (CBAM) reshaping global trade and India advancing its own Carbon Credit Trading Scheme (CCTS) and Greening the Steel Sector roadmap, hydrogen-based ironmaking is emerging as a strategic lever for a globally competitive, low-carbon steel industry. Andhra Pradesh’s strategic ports, abundant renewable energy resources, industrial ecosystem and Integrated Clean Energy (ICE) Policy — spanning renewable energy, green hydrogen, green ammonia, storage and transmission — position the state as a potential hub for green steel manufacturing and exports.
The green premium for hydrogen-based steel remains modest, with production costs of USD 571–606/tcs (INR 49,800–52,800/tcs), compared with USD 536/tcs (INR 46,700/tcs) for BF-BOF steel. Since the cost gap is relatively narrow, technology selection will depend on factors such as iron feedstock, technology maturity and emissions.
India’s carbon market could improve the competitiveness of green steel as carbon costs on conventional BF-BOF production rise. A common emissions-intensity threshold could further provide direct incentives for low-carbon steel producers.
CBAM could benefit Indian hydrogen-based steel exports by making them USD 179–209/tcs (INR 15,600–18,200/tcs) cheaper than BF-BOF steel by 2033. However, its overall impact would be limited as India exports only around 3–5 percent of its steel.
Hydrogen is expected to be more competitive than natural gas at USD 1.70–2.11/kg (INR 148–184/kg). Natural gas could serve as a fallback but would increase emissions and dependence on imported LNG.
Project economics will also depend heavily on power procurement benefits, particularly group-captive surcharge exemptions and utility banking. Access to both is required for the base case to meet the 1.3-times debt-service coverage requirement.
Hub-based hydrogen could further strengthen project viability. Buying hydrogen at around USD 2/kg (INR 174/kg) could avoid about USD 1.2 billion (INR 10,500 crore) in electrolyser investment and improve debt-service coverage from 1.65 to 1.93 times.
The session commenced with welcome remarks by Girish Sethi, Senior Director, TERI, who spoke about the significance of the study and TERI’s role in supporting India’s green steel transition. He highlighted the commercial challenge facing green hydrogen, noting that companies will naturally look for viable returns and that many emerging projects in Andhra Pradesh are linked to export markets. He described the current situation as a ‘chicken and egg’ challenge, where green hydrogen may be available but at a higher cost, while buyers are not yet willing to pay that price, creating a challenge for producers seeking to bring costs down.
Alastair Jackson, Head of Research, Transition Asia, in his opening remarks on the techno-economic case for H₂-DRI in Andhra Pradesh and Transition Asia’s collaboration with TERI, highlighted that India’s growing steel demand makes low-carbon steel production ‘not just a climate or environmental obligation but a strategic national priority.’
He emphasised India’s opportunity to leapfrog conventional pathways by leveraging its abundant renewable energy resources, iron ore and emerging green hydrogen capabilities to build a globally competitive low-carbon steel industry.
This was followed by a detailed presentation on national and state-level policies by Meenu Saini, Associate Fellow, TERI, and a presentation on the techno-economic case for H₂-DRI in Andhra Pradesh by Mr Alastair Jackson, Head of Research, Transition Asia.
On the power sector’s role in enabling green hydrogen and green steel deployment, Surya Prakash T.V., Director (Operations), Eastern Power Distribution Corporation (APEPDCL), highlighted the crucial role of reliable and competitively priced renewable electricity in enabling the commercial viability of green hydrogen projects. Referring to the Andhra Pradesh Clean Energy Policy 2025, he highlighted incentives such as exemptions on intrastate transmission charges, cross-subsidy and additional surcharges, as well as financial support for infrastructure development in designated green hydrogen hubs. He also highlighted the options available to procure renewable power through open access, third-party procurement, and power exchanges.
On Andhra Pradesh’s renewable energy and clean-energy policy readiness, Srinivas K., General Manager, NREDCAP, highlighted the significant growth potential for green hydrogen demand in the coming years, particularly in the refinery, steel, and transport sectors. He also noted the opportunities for green ammonia exports, particularly to markets such as Japan and European countries.
AM Green, NTPC Green Energy, and Danieli subsequently presented technology perspectives covering different aspects of the H₂-DRI value chain, highlighting the opportunities associated with its deployment in Andhra Pradesh.
The technical and policy presentations were followed by a roundtable discussion moderated by Mr Sobhanbabu PRK, Senior Fellow, TERI, with participation and valuable contributions from AM/NS India, GAIL, APEPDCL, Andhra University, Indian Institute of Petroleum and Energy (IIPE), Danieli, and NTPC Green Energy.
TERI and Transition Asia noted that the inputs and recommendations gathered during the workshop will help strengthen the study and inform future action by policymakers, industry, financial institutions and technology providers working to accelerate India’s transition to green steel production.
