5 Strategies to Compete in the Global Green Steel Race

Introduction: The Urgency of Green Steel

The global steel industry is at a turning point. With the EU’s Carbon Border Adjustment Mechanism (CBAM) set to penalize high-carbon imports and India’s 2070 net-zero pledge, steelmakers must act swiftly to decarbonize. The transition to green steel is no longer just about sustainability—it’s about maintaining competitiveness in an evolving global market.

India, the world’s second-largest steel producer, faces mounting pressure to align with low-carbon steelmaking. Here are five key strategies Indian steelmakers must adopt to stay ahead in the global green steel race.

1. Transition to Hydrogen-DR Plants

The most promising pathway for low-carbon steel production is Direct Reduction (DR) using Hydrogen instead of coal-based reduction. DR technology is already well-established, and hydrogen can fully replace natural gas in the reduction process to produce zero-carbon Direct Reduced Iron (DRI).

Key Insights:

Paul Wurth’s feasibility studies indicate that India, with its existing DRI production capacity, can rapidly scale up Hydrogen-based DR plants.
The cost of green hydrogen remains a challenge, but the National Green Hydrogen Mission aims to cut production costs significantly.
Integration with Electric Arc Furnaces (EAFs) allows further carbon reductions when powered by renewable energy.

2. Circular Economy: Scrap-Based EAFs & Renewable Energy

A strong circular economy approach can drastically cut emissions. Shifting to scrap-based Electric Arc Furnaces (EAFs) combined with renewable energy can significantly reduce the carbon footprint of steel production.

Benefits:

Lower energy intensity: EAFs require significantly less energy than traditional Blast Furnace-Basic Oxygen Furnace (BF-BOF) routes.
Resource efficiency: Increased use of steel scrap reduces dependence on virgin iron ore and mining emissions.
Renewable integration: Running EAFs on solar and wind power ensures near-zero emissions in steelmaking.

To scale up, India needs investments in scrap collection infrastructure and efficient sorting & processing systems.

3. Government-Industry Partnerships

Collaboration between the government and private sector is critical to accelerating the transition to net-zero steel. Strategic funding, incentives, and policy frameworks will be key enablers.

Case Study: MNRE’s Hydrogen Valleys

The Ministry of New and Renewable Energy (MNRE) is supporting the development of Hydrogen Valleys, industrial clusters dedicated to hydrogen production and use. Steelmakers can benefit from:

Subsidized green hydrogen supply
R&D funding for industrial-scale pilots
Infrastructure development grants for hydrogen storage and distribution

Other essential policy tools include tax credits, carbon pricing mechanisms, and mandates for green steel procurement in government projects.

4. Carbon Capture Retrofits for Existing Plants

For steelmakers operating coal-based blast furnaces, Carbon Capture, Utilization, and Storage (CCUS) offers a transition pathway to lower emissions while maintaining production continuity.

Key Considerations:

CCUS retrofits can reduce emissions from existing BF-BOF plants by up to 90%.
The challenge remains cost-effectiveness, with current carbon capture costs ranging between $50-100 per ton of CO₂.
Government incentives and global carbon pricing will be crucial in making CCUS financially viable.

Investing in pilot projects and collaborating with global CCUS technology providers will help Indian steelmakers prepare for large-scale deployment.

5. Skill Development for Green Tech Adoption

The shift to hydrogen steelmaking, EAFs, and CCUS requires a workforce equipped with new technical expertise. Upskilling initiatives are vital for both engineers and plant workers to ensure a smooth transition.

Action Plan:

Establish Green Steel Training Institutes in collaboration with universities and technical schools.
Offer government-sponsored reskilling programs for workers in traditional steel plants.
Encourage public-private partnerships for R&D and on-the-job training in emerging low-carbon steel technologies.

By investing in human capital, India can future-proof its workforce and lead the global shift to sustainable steelmaking.

Conclusion: Cost-Benefit Analysis for SMEs vs. Large Players

The transition to green steel presents unique challenges and opportunities for both large-scale steelmakers and SMEs.

Large players (Tata Steel, JSW, SAIL) have the capital to invest in Hydrogen-DR plants, CCUS, and renewable integration.
SMEs, which account for nearly 40% of India’s steel output, may find it more feasible to shift to scrap-based EAFs and participate in hydrogen hubs.

While the upfront costs of green steel transition are high, the long-term benefits—avoiding carbon border tariffs, improving global market access, and reducing fuel dependencies—far outweigh the risks. India must act now to position itself as a leader in the global green steel race.