New Delhi, July 29
India’s demand for green steel is set for exponential growth, reaching approximately 179 million tons by FY50, a report said on Tuesday.
The surge will be driven by the country’s rapidly growing automotive, infrastructure, and construction sectors, as they pivot toward sustainable manufacturing practices, according to an EY Parthenon report.
According to the report, India targets 500 million tons per annum of steel capacity by 2047, aligned with its climate goals.
"Moving to green steel is no doubt a big shift—it comes with its challenges, but also opens up huge opportunities for India’s industrial sector," said Kapil Bansal, Partner - Energy Transition and Decarbonisation, EY Parthenon.
Right now, the cost may look high, but that’s changing quickly. With carbon pricing on the rise and green hydrogen getting cheaper, what once felt like a nice-to-have for sustainability is fast turning into a business must-have, he added.
Based on an emission intensity benchmark of below 0.5 tons CO2 per ton of crude steel, the analysis estimates that green steel demand—currently negligible—will rise significantly to 4.49 million tons by FY30, the report said.
The construction sector is expected to lead adoption with 2.52 million tons, followed by infrastructure at 1.5 million tons and automobiles at 0.48 million tons.
According to the report, by FY40, total demand is projected to nearly triple to 73.44 million tons.
India's current steel consumption stands at 136 million metric tons, with the construction and infrastructure sectors collectively accounting for 78 per cent of finished steel demand, the report claimed.
This figure is expected to rise to 390 million tons by FY50, driven by rapid urbanisation and infrastructure development.
Traditional BF-BOF steel prices are projected to increase by 81 per cent by 2050 due to escalating carbon taxes, rising from the current $660 per ton to $1,193 per ton, the report highlighted.
However, the premium on green steel produced through hydrogen-based DRI technology is expected to decrease as production scales up and costs decline.
Currently, the green steel premium results in modest increases in production costs across sectors: 4.1 per cent for automotive manufacturing, 3.7 per cent for construction projects, and 5.2 per cent for infrastructure development, the report stated.