The Future of Steel: Global and Indian Demand for Green Hydrogen-Based Steel

As the world intensifies efforts to mitigate climate change, the steel industry—responsible for approximately 7-8% of global carbon dioxide (CO2) emissions—faces growing pressure to decarbonize. The traditional steelmaking process, which relies on coal-based reduction methods, is a significant contributor to these emissions. However, green hydrogen-based steel production presents a viable pathway toward achieving net-zero emissions.

Global Demand for Green Hydrogen-Based Steel: Key Projections

The article https://www.sciencedirect.com/science/article/pii/S0360319924026624 has provided in-depth research on the future demand for green hydrogen-based steel, projecting three distinct phases of demand growth up to 2050. The projections are based on 28 distinct scenarios, revealing a wide range of possible outcomes influenced by factors such as climate policy, technological advancements, and infrastructure development.

Limited Demand in the Short Term (2030):

Projected Demand: By 2030, global demand for green hydrogen-based steel is expected to be around 35 million tons (Mt), which constitutes only 2% of the current global steel production, which stands at approximately 1,890 Mt annually.

Factors Influencing Demand: The slow uptake is primarily due to the nascent stage of hydrogen technologies and the existing reliance on coal-based steelmaking processes. The cost of green hydrogen production remains relatively high, and the infrastructure needed to support large-scale hydrogen-based steelmaking is still under development.

Transformation Phase Around 2040:

Projected Demand: The period around 2040 is expected to see a significant increase in demand, with projections indicating that global demand could rise to 228 Mt, representing 12% of current steel production.

Key Drivers: This acceleration is likely to be driven by enhanced climate policies, increased investment in hydrogen infrastructure, and technological advancements that reduce the cost of green hydrogen. Additionally, the global push for decarbonization, particularly in high-emission sectors like steel, will play a crucial role in driving this demand.

Massive Demand by 2050:

Projected Demand: By 2050, global demand for green hydrogen-based steel is projected to reach 660 Mt, which is equivalent to 35% of today’s steel production. The interquartile range for this demand is estimated to be between 368 Mt and 1,000 Mt.

Infrastructure Requirements: Meeting this demand will require a massive scale-up in green hydrogen production and infrastructure. Specifically, the demand for green hydrogen for steelmaking alone is expected to be around 41 Mt by 2050. To achieve this, the world will need to increase its electrolyser capacity by more than 1,000 times from the current level of approximately 0.5 GW to around 561 GW (with an interquartile range of 312 GW to 849 GW).

Renewable Electricity Demand: The renewable electricity required to power these electrolysers is projected to reach 2,556 TWh by 2050, which is nearly equivalent to the total current output from all global solar and wind energy generation combined.

India’s Role in the Global Green Hydrogen Steel Market

India, the world’s second-largest steel producer, is poised to play a critical role in the global transition to green hydrogen-based steel. The country’s steel industry, which currently accounts for a significant share of its industrial emissions, is central to India’s broader decarbonization goals.

According to projections from BloombergNEF, under a net-zero scenario by 2050, the role of hydrogen in India’s emissions abatement will be substantial:

• Steel Sector: Hydrogen is expected to account for 25% of the emissions abatement in India’s steel sector by 2050, while carbon capture and storage (CCS) is projected to contribute 50%.
• Transport Sector: Hydrogen is also anticipated to play a significant role in the transport sector, particularly in shipping (27%) and aviation (15%).
• Overall Industrial Emissions: Hydrogen’s contribution to emissions abatement in other industrial sectors such as cement and aluminium is projected to be 26% each by 2050.

Key Drivers of Green Hydrogen Demand in India

Expanding Steel Production:

Current Production: India’s steel production in 2022 was approximately 125 Mt, and this figure is expected to grow significantly in the coming decades to meet rising domestic and international demand.

Projected Demand: By 2050, India’s steel production could exceed 200 Mt annually, necessitating a transition to green hydrogen-based processes to align with global decarbonization goals.

Renewable Energy Potential:

Current Capacity: India has a renewable energy capacity of around 120 GW, primarily from solar and wind sources.

Future Expansion: To meet the hydrogen demand for steelmaking, India will need to dramatically scale up its renewable energy capacity. Estimates suggest that by 2050, India could require up to 450 GW of renewable energy dedicated to green hydrogen production for steelmaking alone.

Government Initiatives:

National Hydrogen Mission: Launched in 2021, India’s National Hydrogen Mission aims to position the country as a global hub for green hydrogen production. The mission sets out a roadmap for increasing electrolyser capacity, scaling up renewable energy, and reducing the cost of green hydrogen.

Policy Support: The Indian government has introduced incentives and policy frameworks to encourage investment in hydrogen technologies, including subsidies for electrolyser manufacturing and renewable energy projects.

Global Market Opportunities:

Export Potential: As international markets, particularly in Europe and North America, implement carbon border adjustment mechanisms (CBAMs), the demand for low-carbon steel products will increase. Indian steelmakers that adopt green hydrogen-based production processes will be well-positioned to capture a significant share of this emerging market.

Strategic Implications and Challenges

The transition to green hydrogen-based steel production represents both an opportunity and a challenge for India and the world. The scale of the required infrastructure investment is immense, and the costs associated with green hydrogen production are still relatively high compared to traditional methods. However, the long-term benefits, including reduced emissions, enhanced energy security, and access to global markets, make this transition imperative.

For India, the strategic implications are particularly significant. By becoming a leader in green hydrogen-based steel production, India can not only meet its domestic energy and climate goals but also emerge as a key player in the global green economy. However, this will require coordinated action across the public and private sectors, substantial investment in infrastructure, and the development of a robust regulatory framework.

The Road Ahead

The steel industry’s transition to green hydrogen is necessary for achieving global climate targets and a strategic opportunity for countries like India to lead in sustainable industrial practices. While the challenges are significant, the potential rewards—environmental impact and economic growth—are immense.

As the world moves closer to its 2050 net-zero goals, adopting green hydrogen-based steel production will become increasingly critical. For India (2070 net-zero goal), this transition offers a path to sustainable growth, energy security, and global leadership in the green economy. The time to invest in this future is now, ensuring that the steel industry can continue to support global development while playing its part in the fight against climate change.

Dr Mayilvelnathan Vivekananthan M.Eng.,PhD

Strategy Advisor - Green Hydrogen Value Chain

Director, Cipher Neutron Inc

[email protected] / [email protected]

www.cipherneutron.com

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