UNLOCKING GREEN STEEL DEMAND

An assessment of India’s automotive,

infrastructure and construction sectors
 Acknowledgement
The transition towards green steel has become one of the major topics in the steel
industry. The whitepaper “Unlocking green steel demand: An assessment of India’s
automotive, infrastructure and construction sectors” has been prepared by Ernst &
Young (EY)-Parthenon in collaboration with WWF-India & CII-Green Business Centre
(GBC). Bernt Nordman, Head of Climate Program of WWF Finland, is an advisor to
the project. We are thankful to Mr. R.K. Goyal, Chairman - India Green Steel Coalition
(IGSC) for his inputs and to the IGSC steering committee members for their inputs.
We are extremely thankful to all stakeholders who supported the development of
this whitepaper, and for providing valuable feedback that helped shape the contents
and finalize the recommendations. Finally, we would like to thank all the members
of the team who were involved in the development process at various stages of the
initiative. The report is produced under a project funded by WWF Finland. The report
does not necessarily reflect the views of the funder.

Credit Date of Publication

Copyright © WWF-India. Published by WWF-India. July 2025
Reproduction in full or part of this publication is authorized,
provided source is acknowledged and the title and the
publisher as the copyright owner is mentioned.

2 Unlocking green steel demand

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Unlocking green steel demand 3

 Disclaimer
This report has been prepared by EY Parthenon in collaboration with WWF-India &
CII-Green Business Centre (GBC). The research and inputs from EY Parthenon, are
based on publicly available information and data gathered from different sources.
WWF-India, CII-GBC, and EY Parthenon disclaim any and all liability for the use that
may be made of the information contained in this report. While the experts and
organizations listed in the acknowledgements and appendix have provided inputs
for the development of this report, their participation does not necessarily imply
endorsement of the report’s contents or conclusions. The tables and charts in the
report are based on the available data accessed from various reliable sources. The
sources have been duly recognized in the report. Further, the views in the document
do not necessarily reflect those of WWF-India, CII-GBC or EY Parthenon

Authors Reviewed by
EY Parthenon: Kapil Bansal, Reshma Dr Arvind Bodhankar, Chief Sustainability Officer, Arcelor Mittal Nippon Steel India
Narayanankutty, Swapnil Kaushik Mr Bernt Nordman, Head of Climate Program, WWF Finland
WWF-India: Vishal Dev, Vishal Sukhija, Mr Naveen Ahlawat, Head – Power to X, Jindal Steel & Power Ltd
Kalyan Verma, Mansi Chauhan Mr Prabodha Acharya, Chief Sustainability Officer, JSW Group
CII-GBC: Vinoth BalaKumar Mr Rajiv Mangal, Vice President Safety, Health & Sustainability, Tata Steel Limited
Mr Sandeep Tandon, National Project Manager, Low Carbon Technology
Deployment Project, UNIDO

4 Unlocking green steel demand

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Unlocking green steel demand 5

Contents
01 Executive summary 10

02 Indian steel sector: 500 MMTPA capacity by 2047 12

03 Demand for green steel in India 16

04 Premium on green steel 20

05 What is the impact of CBAM on the Indian steel industry? 28

06 Policy mechanism for steel decarbonization in India 32

07 Recommendations 36
 List of
figures
Figure 1: India’s steel production target vs. steel demand (MMT).............................................................................................11

Figure 2: Steel consumption in end-use sectors of India, FY24................................................................................................11

Figure 3: Forecasted steel consumption in end-use sectors (MMT).........................................................................................13

Figure 4: Demand for green steel in construction, infrastructure and automobile sectors in India (MMT) .................................15

Figure 5: Green steel supply-demand gap in construction, infrastructure and automobile sectors in India (MMT)........................17

Figure 6: Impact of carbon price on sales price of BF-BOF steelmaking (US$/t steel).................................................................19

Figure 7: Green steel premium and impact of carbon price on sales price of H2 DRI steelmaking (US$/ t steel)..........................20

Figure 8: Green steel premium and carbon tax impact on automotive production cost..............................................................21

Figure 9: Green steel premium and carbon tax impact on construction production cost............................................................22

Figure 10: Green steel premium and carbon tax impact on infrastructure production cost........................................................25

Figure 11: Steel emission intensity benchmarks and EU exports projections............................................................................27

Figure 12: EU ETS carbon price projections...........................................................................................................................27

Figure 13: Impact of CBAM (Million US$)...............................................................................................................................28

8 Unlocking green steel demand

List of
common abbreviations
Abbreviation Definition

BF Blast furnace

BOF Basic oxygen furnace

CBAM Carbon Border Adjustment Mechanism

CCUS Carbon Capture, Utilization and Storage

CP Carbon Price

DRI Direct reduced iron

EAF Electric arc furnace

EU ETS European Union Emissions Trading System

MMT Million metric ton

MMTPA Million metric tons per annum

NG Natural gas

RE Renewable energy

USD US dollars

Unlocking green steel demand 9

 Executive
summary
01
The steel sector is a cornerstone of India’s economic growth, across sectors to below 1% by 2035-2040. In contrast, the
contributing significantly to infrastructure and industry while continued use of carbon-intensive BF-BOF steel will lead to
also being a major source of greenhouse gas emissions. It rising costs due to escalating carbon taxes.
currently accounts for approximately 8% of India’s total carbon
emissions, underscoring the urgent need for decarbonization The transition towards green steel is driven by several key
as the country pursues its climate goals. Today, India’s steel factors: economic incentives that promote the use of low-
consumption stands at 136 million metric tons (MMT), carbon technologies, increasing downstream demand for
projected to increase to 220 MMT by FY30 and further to 390 sustainable products, advancements in technology that
MMT by FY50. This growing demand is driven by three key enhance the feasibility of green steel production, and
sectors— automotive, construction and infrastructure— which regulatory mandates pushing industries towards sustainability.
together account for over 70% of consumption and are also
poised for rapid growth.
Currently, India exports approximately 7 MMT of iron and
steel, and its products to the EU, with projections indicating
Although demand for green steel in India is currently negligible, a 50% increase by 2030. However, the implementation of
it is expected to rise significantly over the coming decades. By the European Union’s Carbon Border Adjustment Mechanism
FY30, demand is projected to reach 4.49 million tons, driven (CBAM) poses significant challenges for Indian steel exporters.
primarily by the construction sector at 2.52 million tons, Without proactive decarbonization efforts, these exports could
followed by infrastructure at 1.5 million tons, and automobiles face a tax impact of INR19,277 crores by 2030. This projected
at 0.48 million tons. This early uptick will be fueled by growing taxation stems from an emission intensity differential of ~106%
urbanization and a shift towards sustainable building practices. between Indian and EU steel, a year-on-year reduction in the
By FY35, demand is set to reach 24.89 million tons, and will EU Emissions Trading System (ETS) benchmarks, and a gradual
more than double again to 73.44 million tons by FY40, largely reduction of free allowances, which will inflate the prices of
due to the green transition in infrastructure and automotive carbon certificates currently at US$71 per ton of CO2.
manufacturing. By FY50, green steel demand is projected to
peak at 179.17 million tons, with construction accounting for
Given the potential financial repercussions on key export
more than half, and infrastructure and automobiles continuing
sectors, it is crucial for India to implement regulatory measures
to contribute significantly. Meeting this demand will require
that facilitate the decarbonization of the steel industry. This can
widespread adoption of green hydrogen-based DRI technology,
be achieved through a variety of policy initiatives. Firstly, India
along with sustainable production methods such as electric arc
could establish a comprehensive carbon pricing mechanism,
furnaces and molten oxide electrolysis.
encouraging industries to reduce emissions. Developing a
carbon credit trading scheme would allow companies to buy
The transition towards green steel is driven by a notable price and sell carbon credits, fostering innovation and investment in
premium due to its higher production costs and the impact green technologies. Additionally, setting regulatory mandates
of carbon pricing on traditional fossil-based steelmaking. for emission reductions aligned with international standards will
Currently, the premium on green steel produced through H₂2 promote accountability and transparency. Financial incentives
DRI technology stands at US$210 per ton, translating to a 3.7% for adopting low-carbon technologies, such as capital subsidies
increase in construction project costs, 5.2% in infrastructure for green steel production processes, can further accelerate the
projects, and 4.1% in automotive manufacturing. However, as transition. Strengthening public-private partnerships to drive
green hydrogen costs decline and technology scales up, the research and development in low-emission technologies will
premium is projected to drop significantly. By 2030, the green also play a vital role.
steel premium will fall to US$7 per ton, reducing cost impacts

10 Green steel demand in India

As India faces the challenges and opportunities associated the global steel market while contributing to a sustainable
with rising steel demand and the global shift towards future. The transition to green steel is not merely a response
sustainability, developing a robust policy framework is to external pressures; it presents a significant opportunity for
essential. By adopting strategic regulatory measures, India to lead in sustainable industrial practices and secure its
fostering innovation and aligning with international economic growth in an increasingly carbon-conscious world.
standards, India can enhance its competitive position in
 Indian steel sector: 500
MMTPA capacity by 2047
02 As India embarks on its journey towards becoming
a US$30 trillion economy by 2047, the steel sector
stands as a cornerstone of this transformation.
Steel is more than a commodity; it is the lifeblood
of industrialization and innovation. The evolution of
India’s steel industry over the next two decades will
mirror the country’s broader aspirations of self-
reliance, sustainability and global leadership. The
Indian steel industry has experienced remarkable
growth in recent years. In the last five years, the
world’s steel capacity grew by approximately
62 million tons, and India contributed 6% to this
expansion1. India’s impressive performance in
the steel sector underscores its pivotal role in
the international arena, bolstered by initiatives
like Atmanirbhar Bharat that promote domestic
manufacturing.

The National Steel Policy (NSP) of 2017 has been

instrumental in this achievement, setting forth
ambitious objectives to reach a crude steel capacity
of 300 million tons by the fiscal year 2030-312.
This target includes a projected production of 255
million tons of crude steel out of which 230 million
tons is finished steel. The policy’s goals are to
ensure India’s self-reliance in steel production and
to serve both the domestic and global markets. The
policy landscape is not just about capacity targets, it
shapes the future of downstream sectors. It is now
increasingly becoming aligned with India’s national
priorities such as Affordable Housing, Smart Cities,
Make in India, and clean mobility. These linkages
are critical as the country witnesses rising demand
for steel-intensive assets across sectors. It focuses
on expanding capacity, improving quality and
adopting practices that are sustainable. Looking to
the future, India seeks to triple its current installed
capacity by increasing its annual steel production
capacity to 500 million tons by the year 2047.

1. PIB, October 2024, India’s Steel Industry: Story of Growth and

Global Leadership
2. PIB, May 2017, National Steel Policy 2017

12 Unlocking green steel demand

Figure 1: India’s steel production target vs. steel demand (MMT)

600 Installed capacity Finished steel production Steel consumption 600

490 500
500 500

422
400 400

403
354

395

390
382
340
283

329
300 300
286

276

179
228

200 200
220
139

136

100 100

0 0
FY24 FY30 FY35 FY40 FY45 FY50

Source: EYP Analysis

Figure 2: Steel consumption in end-use sectors of India, FY24

1%
9%
Construction

136
22% Infrastructure
43%
Engineering and packaging
MMT
Automobiles
Defense
25%

Source: Ministry of Steel, Annual Report FY24

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Unlocking green steel demand 13

 In India, the primary sectors driving steel consumption to 2050. It highlights a progressive increase in the demand
include construction, which accounts for 43% of the usage, for steel, with projections indicating the steel consumption
followed by infrastructure development at 25%, engineering shall reach 390 MMT in FY50. The construction and
and packaging at 22%, automotives at 9%, and defense at 1%. infrastructure sectors emerge as the dominant consumers,
with the construction sector alone expected to require 205
The construction and infrastructure sectors collectively million metric tons (MMT) of steel by FY50. Similarly, the
account for 78% of the demand for finished steel in India. infrastructure sector is predicted to reach a consumption
The construction sector includes rural and urban residential level of 102 MMT by the same fiscal year.
projects, commercial and institutional structures, while the
infrastructure sector encompasses transportation networks, In addition to these primary sectors, the engineering and
railways, airports, ports, urban transit systems, energy packaging sector is poised for significant growth, albeit on a
projects and waste and water management facilities. smaller scale. The automobile sector showcases a consistent
rise in steel demand, which can be attributed to the
In FY24, the country’s total steel consumption reached 136 burgeoning automobile industry. By FY50, the steel demand
million tons. Despite this, India’s annual per capita steel from this sector is expected to reach 26 MMT. Furthermore,
consumption stands at 97.7 kg, which is only one-third of the the defense sector, while modest in its current consumption,
global average, indicating significant potential for growth in is on an upward trajectory that suggests promising growth
steel usage across various sectors. prospects. The analysis emphasizes the pivotal role that steel
plays in the advancement of these key sectors, serving as the
The low per capita consumption also reflects an opportunity. backbone for their development and the nation’s progress.
India’s demographic dividend, rapid urbanization and
government-led capital expenditure are poised to unlock a Overall, the forecast underscores the importance of strategic
new wave of demand. By FY31, it is anticipated that India’s planning in the steel industry to meet the growing demands
total steel demand will surge to approximately 230 million of these diverse sectors. It also suggests that the steel
tons. This expansion is expected to be propelled by the industry’s expansion is closely tied to the nation’s economic
construction sector, which will benefit from an increasing growth, with the potential to significantly contribute to India’s
urbanization rate and a higher steel intensity in construction infrastructure and industrial development. India’s National
practices. Additionally, the infrastructure segment is poised Steel Policy aims to increase per capita steel consumption
for growth, with investments in roads, railways and airports to 160 kg by FY31 from the current 97.7 kg in FY24. The
contributing to a rise in steel usage. anticipated growth in steel demand across these sectors
reflects the dynamic nature of the Indian economy and the
The data presented in Figure 3 provides a comprehensive need for robust supply chains to support this expansion.
forecast of steel consumption trends from fiscal year 2030

14 Unlocking green steel demand

Figure 3: Forecasted steel consumption in end-use sectors (MMT)

390

329

276 205

220 159

131

101
102
92
76
59

49 52
41 45
18 21 24 26
3 3 4 5
FY30 FY35 FY40 FY50

Construction Infrastructure Engineering and packaging Automobiles Defense

Source: EYP Analysis

Key notes for the analysis

01 Finished steel demand projections are analyzed based on growth rate of each end-use sector over
FY30, FY40 and FY50

Table 1: Steel consumption CAGR over the fiscal years across the sectors

CAGR
Sector
FY24-FY30 FY30-FY35 FY35-FY40 FY40-FY50

Construction 9.69% 5.34% 3.95% 2.57%

Infrastructure 9.62% 5.19% 3.90% 1.04%

Engineering and packaging 5.34% 1.88% 1.72% 0.60%

Automobile 6.99% 3.13% 2.71% 0.80%

Defense 20.03% 0% 5.92% 2.26%

15

Unlocking green steel demand 15

 Demand for green
steel in India
03 As India scales up its steel production and
consumption, the nature of demand is also expected
to evolve, not just in volume, but in quality and
sustainability. Global investors and trade partners
are increasingly sensitive to the carbon footprint of
industrial goods. As such, green steel is not merely
a technological ambition; it is rapidly becoming a
market necessity. Integrating low-carbon production
pathways into India’s steel growth narrative will
ensure not only international competitiveness but
also alignment with India’s climate commitments.
The path to 500 MMTPA must therefore be paved
with both ambition and responsibility.

The demand story for green steel/low-carbon steel

in India is not happening in isolation. Globally,
construction, infrastructure and automotive
industries are undergoing deep decarbonization
transitions, driven by climate regulations, investor
scrutiny and customer preferences. For instance,
the European Union’s Green Public Procurement
policies now include low-carbon steel as a key

16 Unlocking green steel demand

criterion in infrastructure contracts. Automakers have such as green hydrogen-based DRI-EAF, and scrap-based
already launched initiatives to integrate green steel EAF powered by RE, are emerging as critical solution to
into their supply chains. These global signals are now reduce carbon emissions in steel production. The demand
influencing Indian companies, especially those integrated for green steel is projected to increase exponentially over
into global value chains, to pivot towards green steel, even the next few decades, driven by ambitious net zero targets
in the absence of domestic mandates. India’s real estate of end-use sector companies, especially on Scope 3, and
developers, infrastructure companies and automakers are sectoral growth. Public procurement also plays a crucial role
aligning with global ESG benchmarks and emission reduction in driving demand for green steel by setting sustainability
targets, making green steel adoption both a reputational and benchmarks in government projects. The government also
strategic imperative. plans to roll out policies around public procurement. A closer
analysis of the green steel demand trajectory, as depicted in
As Indian industries align themselves with global climate the accompanying graph, highlights this growth across key
goals and domestic policy imperatives, green steel (emission sectors: automobiles, infrastructure and construction.
intensity less than 0.5 tCO2/t crude steel) production routes,

Figure 4: Demand for green steel in construction, infrastructure and automobile sectors in India (MMT)

Construction Infrastructure Automobiles 179.17

180
102.64

75 73.44

39.74

51.10
30

23.10
24.89
25
13.06

10
7.60
25.43
5 4.49 10.60
2.52
4.23
1.50
0 0.48
FY30 FY35 FY40 FY50

Source: EYP analysis based on primary interaction/interviews

17

Unlocking green steel demand 17

 Key notes for the analysis

01 Inputs were taken from three prominent auto companies, and two prominent construction and
infrastructure companies

02 Green steel demand over the years is calculated based on net zero targets of the companies holding
more than 85% cumulative share in automobile, construction and infrastructure sectors

03 In automobile sector, steel consumption across various automobile sub-segments, namely Light Commercial
Vehicles, Medium & Heavy Commercial Vehicles, Passenger Vehicles, Two-Wheelers, and Three-Wheelers has been
analyzed based on two key factors: Per-unit steel usage and projected growth of each sub-segment through FY50.
The analysis also considers the evolving share of Internal Combustion Engine vehicles and Electric Vehicles (EVs)
within each sub-segment.

04 The estimated demand for green steel is derived based on the assumption that automotive companies will begin
procuring green steel at least 10 years prior to achieving their net zero or Scope 3 targets. This transition is modeled
to start with 10% green steel procurement in the first year, increasing by 10% points each subsequent year

05 In construction sector, steel consumption was analyzed for residential buildings, commercial spaces, industrial, and
institutional builds. The infrastructure sector covers analysis of steel consumption in transport, railways, airports
and ports, urban transits, energy, and waste and water infrastructure.

06 The estimated green steel demand from construction and infrastructure sectors is based on scenario-based
demand estimation, wherein certain percentage of overall steel demand is green steel, which is derived on basis of
improving ESG and sustainability ratings, net zero targets, government’s public procurement, etc.

Table 2: Total steel (conventional + green) consumption of sectors (MMT)

Sector FY30 FY35 FY40 FY50

Construction 101 131 149 205

Infrastructure 59 76 92 102

Automobile 18 21 24 26

Currently, the demand for green steel remains negligible sector’s contribution rises to 39.74 million tons, solidifying
across these sectors. However, a significant shift is observed its position as the largest consumer of green steel.
by FY30, where total demand reaches 4.49 million tons, with Infrastructure projects also see significant growth, reaching
the construction sector taking the lead at 2.52 million tons. a demand of 23.10 million tons. The automobile sector,
Infrastructure follows with a demand of 1.5 million tons, and at 10.60 million tons, reflects the automotive industry’s
the automobile sector, at 0.48 million tons, begins to show transition to cleaner manufacturing processes.
early signs of adoption. The construction sector’s dominance
in this phase reflects India’s need to meet its expanding By FY50, the demand for green steel reaches a staggering
urbanization requirements while adhering to greener building 179.17 million tons, underscoring the scale of India’s green
practices. Sustainable construction materials like green steel transition. The construction sector remains the largest
are becoming central to reducing emissions associated with consumer at 102.64 million tons, accounting for more than
real estate and civil engineering projects. half of the total demand. Infrastructure demand also grows
steadily to 51.10 million tons. The automobile sector, while
By FY40, total demand for green steel nearly triples to smaller in absolute terms, registers a demand of 25.43
73.44 million tons, compared to FY35. The construction million tons, marking a significant leap compared to earlier

18 Unlocking green steel demand

years. At this stage, green steel is expected to become a mainstream material in automobile manufacturing, supporting the
development of carbon-neutral vehicles.

The trends evident from this analysis highlight the pivotal role of green steel in India’s sustainability journey. The construction
sector is expected to continue to drive the bulk of the demand, fueled by sustainable urbanization and eco-friendly building
materials. Infrastructure, as the backbone of economic growth, may remain a key contributor, with mega projects incorporating
green steel to align with net zero commitments. Meanwhile, the automobile sector, although a smaller segment, could see
exponential growth as automakers adopt low-carbon technologies and aim for greener supply chains.

With the construction, infrastructure and automobile sectors driving demand, innovative green hydrogen-based Direct
Reduced Iron (DRI) steelmaking and alternative green production methods are poised to transform the industry. India’s path to
decarbonization hinges on scaling green steel production to bridge the anticipated supply-demand gap

Figure 5: Green steel supply-demand gap in construction, infrastructure and automobile sectors in India (MMT)

Green steel supply* (2050 net zero scenario) Green steel supply* (2070 net zero scenario) Green steel demand**
200
All values mentioned in million metric tons (MMT)
180 *Through GH2 - based DRI steelmaking. **Construction, infrastructure, automobile sector 179.17

160 150.93
140

120
98.63
100

80
73.44
60 47.89
40

20 24.89
4.75
1.90 4.49 15.20 36.01 52.45
0
FY30 FY35 FY40 FY50
Source: EYP Analysis

Key notes for the analysis

01 The representation of green steel supply in India is derived from our analysis presented in the
whitepaper titled ‘Role of green hydrogen in the Indian steel sector’

In the net zero 2070 scenario, H2 DRI steelmaking is 2050 scenario, while the supply of GH2 DRI steel suffices
projected to supply nearly 36, and 52 MMT of green steel up to FY40, a 19% shortfall emerges by FY50. Addressing
in FY40, and FY50, respectively. The accelerated 2050 this gap necessitates the adoption of supplementary green
net zero scenario indicates significantly higher production steel production methods, such as scrap-based electric arc
levels, with outputs of nearly 99, and 151 MMT for the furnaces powered by renewable energy and molten oxide
same years. However, demand in these periods will climb electrolysis (MOE). These alternative technologies will be
steeply to 73 MMT and 179 MMT. This creates a substantial pivotal in ensuring India meets its green steel demand while
supply-demand gap under the 2070 scenario, reaching achieving sustainable industrial growth.
deficits of 103%, and 241%, respectively. In the accelerated

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Unlocking green steel demand 19

 Premium on green steel
04 The green steel premium refers to the additional
cost associated with producing steel through
green steelmaking processes, such as using
GH2-DRI or EAFs powered by renewable energy,
instead of traditional steelmaking routes. This
premium reflects the higher capital and operational
expenditures required to adopt cleaner technologies
and decarbonize the steel value chain. The concept
is important as it acknowledges the financial
gap between conventional and sustainable steel
production, incentivizing early adopters and
enabling the transition towards net zero targets in
the hard-to-abate steel sector. However, widespread
acceptance of this premium hinges on supportive
policies, carbon pricing mechanisms and the
willingness of end-users to pay more for green steel
production.

As efforts to decarbonize the steelmaking facilities

intensify, carbon pricing might play a pivotal
role in driving emissions reduction. The impact
of carbon pricing on steel production through
the Blast Furnace-Basic Oxygen Furnace (BF-
BOF) route is significant and transformative. The
analysis in Figure 6 highlights how the carbon
prices, could elevate the final sales price of steel.
The starting point for this trajectory is the current
sales price of US$660 per ton of steel, which
primarily consists of production costs, cost of goods
sold (COGS), and other operational overheads.
Specifically, production costs and COGS constitute
approximately 88% of the total price, leaving a
smaller portion for taxes, depreciation and profit
after tax (PAT). Our analysis accounts for PAT to
remain constant despite the introduction of carbon
pricing. This implies that the additional financial
burden imposed by carbon regulations is directly
passed on to customers. The carbon price impact,
therefore, acts as an externality, exacerbating
production expenses while necessitating a
proportional rise in the steel sales price. The
emission intensity associated with BF-BOF steel
production in India makes it particularly susceptible
to this effect, as carbon-intensive processes are
inherently more vulnerable to regulatory cost
escalations.

20 Unlocking green steel demand

Figure 6: Impact of carbon price on sales price of BF-BOF steelmaking (US$/t steel)

Cost of production COGS Impact of carbon price Others (Depreciation + Tax) PAT
All values mentioned in nominal terms 1,193

390 +81%
929
851
753
390
660 191
390
+14%
390

390 191
191 533
191
269
191 191
93
39 39 39 39 39
40 40 40 40 40
2024 2030 2035 2040 2040

Source: EYP Analysis

Key notes for the analysis

01 The analysis is
based on the 02 Price components
like COGS, 03 PAT is kept
constant 04 The analysis considers
an Indian carbon price of
average figures depreciation, in order to ~US$58/tCO2 by 2030,
of five prominent tax, PAT, etc., is analyze the ~US$115/tCO2 by 2040 and
integrated BF-BOF analyzed from the steel prices. ~US$229/tCO2 by 2050
steelmakers in annual reports of
India. the companies.

Projections based on this externality indicate a steady yet pronounced increase in steel prices over the coming decades. By
2030, the sales price is expected to rise from the current US$660 per ton to US$753 per ton, representing a 14% increase.
This upward trend becomes more pronounced by 2050, with the sales price projected to reach US$1193 per ton—a substantial
81% increase relative to the 2024 baseline. The trajectory underscores the escalating financial implications of carbon pricing as
emission reduction mandates grow stricter in alignment with global climate commitments.

21

Unlocking green steel demand 21

 The underlying data reflects that while the absolute cost pathway to steel production, reducing emissions intensity
of production remains relatively constant at US$390 per substantially. However, this transition to green steel comes
ton over this period, the incremental cost introduced by at a cost, introducing a green steel premium driven by higher
carbon pricing becomes increasingly dominant. By 2040, initial production costs, though carbon pricing can enhance
the carbon price impact and associated regulatory burdens its competitiveness by making fossil-based steelmaking more
will account for a significant portion of the total steel price. expensive.
This shift highlights a broader economic challenge for the
steel industry: balancing climate mitigation objectives with The current baseline sales price of steel stands at
affordability and competitiveness in the market. Unless approximately US$660 per ton, where 88% of the total price
technological advancements or alternative low-carbon comprises production costs and cost of goods sold (COGS).
production pathways like green hydrogen-based DRI-EAF For H2₂ DRI steel, the initial cost structure is markedly higher,
are adopted, BF-BOF steel producers may face challenges necessitating a premium of around US$210 per ton over the
maintaining price stability in a carbon-constrained economy. baseline. This premium reflects the relatively high production
costs of green steel in its early adoption phase, largely
The introduction of green steel produced through green driven by the cost of green hydrogen and the infrastructural
hydrogen-based Direct Reduced Iron (H₂2 DRI) technology investments required to scale up H2₂ DRI technologies. As
represents a significant step towards decarbonizing the such, the early years of green steel production place a
steel industry. Unlike conventional Blast Furnace-Basic notable financial burden on producers, which is anticipated to
Oxygen Furnace (BF-BOF) methods, H2₂ DRI offers a cleaner be transferred to consumers.

Figure 7: Green steel premium and impact of carbon price on sales price of H2 DRI steelmaking (US$/ t steel)

Source: EYP Analysis

Key notes for the analysis

01 The analysis considers an Indian carbon price of ~58 $/tCO2 by 2030, ~115 $/tCO2 by 2040 and
~229 $/tCO2 by 2050

22 Unlocking green steel demand

 However, the dynamics of H2 D ₂ RI steel pricing are set to shift The transition to green steel is also a significant factor
favorably over the coming years due to two critical factors: influencing the cost dynamics of automotive manufacturing,
the falling cost of production and the minimal impact of construction and infrastructure projects. As the industry
carbon pricing on this production route. As global initiatives pivots towards low-carbon solutions, the impact of green
to scale up green hydrogen advance and renewable energy steel premiums and carbon taxes on production costs
becomes increasingly affordable, the cost of producing will play a crucial role in shaping the economic feasibility
H2₂ DRI steel is expected to decline significantly. This of adopting sustainable practices. Below is a sector-wise
reduction in production costs will play a pivotal role in analysis of the current and projected cost impact of adopting
narrowing the green steel premium. By 2030, the sales green steel in these sectors.
price of H2₂ DRI steel is projected to decline to US$760 per
ton, which would narrow down the premium to US$7 per Currently, the adoption of H2 DRI green steel increases
ton. Beyond 2030, H₂2 DRI steel will no longer carry a price automotive production costs by approximately 4%. This is
premium. This represents a substantial decrease from the due to the impact of the green steel premium. However,
initial US$210 premium, signaling progress towards making this impact is projected to decrease to less than 1% by
green steel more cost competitive. 2035-2040, as the green steel premium reduces over time.
Steel, accounting for 50% to 60% of a vehicle’s weight and
The production cost of H₂ DRI steel is expected to decline 15% to 20% of its production value, plays a pivotal role in
further, enabling the sales price to reach US$693 per ton by determining overall manufacturing costs. At the present
2050. The minimal impact of carbon pricing on H₂ DRI steel green steel premium of US$210 per ton, this results in a
further enhances its competitiveness, as producers of BF- modest 4.1% cost increase for automakers. In contrast,
BOF steel will continue to face rising carbon tax burdens over continuing to use BF-BOF steel beyond 2030 could raise
the same period. In contrast, H₂2 DRI steel will benefit from its production costs by 4% to 5% in nominal terms due to
low-emission profile, mitigating the external cost pressures escalating carbon taxes and emissions-related penalties.
associated with carbon regulations. The projected decline in green steel premiums underscores
the long-term economic viability of sustainable steelmaking,
This evolving cost landscape underscores the critical role positioning it as a cost-effective solution to decarbonize
of technology, policy and market incentives in driving the automotive production while mitigating environmental
adoption of green steel. While the initial premium poses impact.
challenges for widespread adoption, the projected decline in
costs offers a clear pathway towards affordability.

Figure 8: Green steel premium and carbon tax impact on automotive production cost

% Impact of H2 DRI steel % Impact of BF-BOF steel Green steel premium

12 All steel price values mentioned in nominal terms 240

base sales price of BF BOF steel (US$/ton of steel)

11 10.4%
210
Green premium compared to current

10 200
% impact of steel prices on cost of
production of automotive sector

9
8 160
7
6 5.2% 120
5
4.1%
4 3.7% 80
3
1.9%
2 1.8% 40
0.8% 0.6%
1 0.0% 7
1.0%
0 0
2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: EYP analysis based on primary interaction/interviews

23

Unlocking green steel demand 23

 Key notes for the analysis

01 Inputs were taken from three prominent auto companies in India.

02 Annual reports of top auto companies in PV sub-segment were referred for financial metrics like
revenue, PAT, PBT, revenue per PV for the analysis.

03 Kerb weight of automotive: 1500 kg; weight of steel per vehicle: 900 kg; cost of steel for automotive companies.

04 The analysis, considers an Indian carbon price of ~US$58/tCO2 by 2030, ~U$115/tCO2 by 2040 and ~US$229/
tCO2 by 2050; Current base sales price of steel for green steel premium comparison: US$660/ton

In the construction sector, the usage of H2₂ DRI green economically viable option for construction companies.
steel currently leads to an increase in production costs of In contrast, continued reliance on BF-BOF steel beyond
approximately 3.7%. Steel, which constitutes 15% to 25% 2030 is expected to increase production costs by 3% to
of the value of a construction project, influences overall 10% in nominal terms, driven by escalating carbon taxes
expenditures. At the present premium of US$210 per ton, and emissions-related costs. The decreasing premium of
this translates to a measurable, yet manageable, 3.7% green steel underscores its potential to not only reduce the
rise in project costs. Encouragingly, as the green steel environmental footprint of construction but also to ensure
premium declines over time, this cost impact is projected cost-effective project execution in the long term.
to drop to less than 1% by 2035 to 2040, making it a more

Figure 9: Green steel premium and carbon tax impact on construction production cost

% Impact of H2 DRI steel % Impact of BF-BOF steel Green steel premium

11 All steel price values mentioned in nominal terms 240

10 210
9.4%
base sales price of BF BOF steel (US$/ton of steel)
production

9 200
Green premium compared to current
of
production of automotive sector
onofcost

8
sector

160
7
on cost
steel prices
construction

6
120
ofprices

4.8%
5
3.7%
of steel

4
the

3.4%
% impact

80
of

3
% impact

2 40
1.8% 1.7%
1 0.7% 0.6%
7
0.0% 0.9%
0 0
2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: EYP analysis based on primary interaction/interviews

24 Unlocking green steel demand

 Key notes for the analysis

01 Inputs were taken from two prominent construction / infrastructure companies in India

02 Inputs were taken on cost of constructing residential and commercial buildings per sq. ft., including
steel consumption

03 Construction cost considered at average of residential and commercial buildings: INR4,170/sq. ft.; weight of steel
per sqft: 6 kg

04 The analysis, considers an Indian carbon price of ~US$58/tCO2 by 2030, ~US$115/tCO2 by 2040 and
~US$229/tCO2 by 2050; Current base sales price of steel for green steel premium comparison: US$660/ton

Currently, the use of H2 DRI green steel increases infrastructure projects costs by approximately 5.2%. Steel, accounting for
5% to 20% of the value of an infrastructure project depending on its type, plays a crucial role in determining overall project
expenses. At the present green steel premium of US$210 per ton, this results in a 5.2% cost increase for infrastructure
developers. However, with the anticipated decline in green steel premiums, this cost increment is projected to reduce to about 1%
by 2035 to 2040. By 2050, the figure shall reach around 0.8%. In contrast, continuing the use of BF-BOF steel beyond 2030 is
expected to raise production costs by 5% to 13% in nominal terms, driven by rising carbon taxes and emissions-related penalties.
This cost dynamic highlights the long-term economic and environmental advantages of adopting green steel, making it a viable
solution for building sustainable and cost-efficient infrastructure.

25

Unlocking green steel demand 25

26 Unlocking green steel demand
 Figure 10: Green steel premium and carbon tax impact on infrastructure production cost

% Impact of H2 DRI steel % Impact of BF-BOF steel Green steel premium

14 All steel price values mentioned in nominal terms 13.1% 240

base sales price of BF BOF steel (US$/ton of steel)

13 210
production

12

Green premium compared to current

200
11
of
sector
cost
sector

10
onof

160
of automotive

9
on cost
of the infrastructure
pricesprices

8
7 6.6%
120
of steel

6 5.2%
production
of steel

4.7%
5
% impact

80
4
% impact

3
2.5% 2.3% 40
2
0.8%
1 0.0% 7
1.3%
1.0%
0 0
2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: EYP Analysis

Key notes for the analysis

01 Inputs were taken

from two prominent 02 Infrastructure projects include
roads, rail and metros, ports, 03 The analysis considers an Indian
carbon price of ~US$58/tCO2 by
construction / airports for the analysis. The 2030, ~US$115/tCO2 by 2040 and
infrastructure values mentioned are average ~US$229/tCO2 by 2050; Current base
companies in India. of the impact of the four sales price of steel for green steel
categories. premium comparison: US$660/ton.

While the initial adoption of H2 DRI green steel imposes a measurable cost premium across the automotive, construction and
infrastructure sectors, the long-term trajectory is one of increasing cost parity and eventual advantage. The projected decline in
green steel premiums, combined with the projected rising cost of carbon-intensive steel, shifts the balance in favor of green steel
over the next decade. For industry stakeholders, this presents a compelling case for early investment and adoption, not just from
an environmental standpoint, but also from a cost-competitiveness perspective. As green steel technologies mature and supply
chains stabilize, it is poised to become the default material for sustainable development, enabling sectors to align with net zero
targets without compromising on economic performance.

27

Unlocking green steel demand 27

 What is the impact of CBAM on
the Indian steel industry?
05 The Carbon Border Adjustment Mechanism
(CBAM) is a regulatory initiative by the European
Union (EU), targeting carbon emissions embedded
in imports across six sectors: steel, cement,
aluminum, fertilizers, electricity and hydrogen.
Designed to counter “carbon leakage”—where
production relocates to countries with lenient
carbon policies—CBAM imposes carbon pricing on
imports from nations without equivalent emissions
pricing and controls. For India’s steel industry,
this regulation intensifies export challenges, as it
adds carbon costs to the EU market, demanding
alignment with the EU’s stringent carbon standards.

India’s steel industry faces a notable emissions

gap compared to the European Union’s strict
benchmarks, posing challenges for competitiveness
under CBAM. The EU’s emission intensity
benchmark for steel (hot metal based), based on
the average emissions of the top 10% of its most
efficient facilities, is currently at 1.28 tons of CO2₂
per ton of steel. In comparison, India’s average
emission intensity remains at 2.5 tons of CO2₂₂ per
ton, underscoring the decarbonization efforts
required for Indian steel exports to the EU.

Based on HS Codes 72 and 73, currently, India

exports approximately ~7 MMT of iron and steel and
its products to the EU3, with projections indicating
growth to 10 MMT by 2030 and 15 MMT by 2050.
However, the EU’s emission intensity benchmark is
anticipated to decrease further due to:

■ Year-on-year reductions in emissions: The top

10 percentile of EU steel plants are continually
lowering their emission intensities, setting a
progressively stringent benchmark.
■ Structural reduction of free allowances:
The EU Emissions Trading System (ETS) and
CBAM are aligned to gradually phase out free
allowances, creating equal carbon costs for
domestic and imported steel to encourage fair
competition.

3. Data from Ministry of Commerce and Industry

28 Unlocking green steel demand

 Figure 11: Steel emission intensity benchmarks and EU exports projections

15 Emission Intensity Indian Steel 2.60

2.55
Emission Intensity EU Benchmark Exports of Steel to EU 13.3 2.40
12.6

Emission Intensity Benchmark for Steel

2.20
Steel Exports to EU from India

12
2.00
(Million Metric Tons)

1.80

(EU ETS) (tCO2/tSteel)

9 14.6 1.60
1.28

1.28

1.20

1.20

1.20 1.40

1.12

1.12
1.12

1.12
1.12

1.05

0.99
1.20

0.92
6
1.20

1.00
1.20

9.7 9.9 10.4 10.8

9.2 9.2 9.5 0.80
7.7 8.2 8.7
6.9 7.3 0.60
3
0.40
0.20
0 0.00
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2040 2045 2050

Source: EYP Analysis

These factors imply that Indian producers aiming to increase exports to the EU will may need to adopt low-carbon technologies to
meet evolving standards and manage potential carbon compliance costs effectively.

Figure 12: EU ETS carbon price projections

450 426
Carbon price All values mentioned in US$ per ton CO2 (nominal terms)
Carbon price (EU ETS), US$ per ton CO2

400

350 333

300
261
250

200 185

150 126
100 71
50

0
FY24 FY30 FY35 FY40 FY45 FY50
Source: EYP Analysis

29

Unlocking green steel demand 29

 Carbon pricing in the European Union currently stands at around US$71 per ton of CO₂ emissions and is projected to increase
significantly, reaching US$120 to US$130 per ton by 2030 and US$400 to US$450 per ton by 2050. This rise is driven by
several factors:

■ Stringent carbon pricing norms: The EU’s progressive tightening of carbon regulations and annual increases in carbon
prices aim to lower emissions across high-intensity sectors like steel.

■ Increasing demand for carbon allowances: As more companies commit to net-zero targets, the demand for carbon
allowances continues to grow. Since the implementation of low-carbon or clean technologies takes time, companies rely on
carbon allowances in the interim to meet regulatory requirements, which adds upward pressure on prices.

■ Decreasing supply of emission allowances: The EU plans to reduce the supply of allowances in the Emissions Trading
System, intensifying competition and cost for compliance.

Figure 13: Impact of CBAM (Million US$)

15,000 Emission Intensity Indian Steel 2.60

Emission Intensity EU Benchmark CBAM Impact (Million US$) 2.55
14,000 2.40
13,000
2.20
12,000
2.00

Emission Intensity Benchmark for Steel

11,000
CBAM Impact (Million US$)

10,086 1.80
10,000

(EU ETS) (tCO2/tSteel)

9,000 1.60
8,490
8,000 1.28 1.28 1.40
1.20 14,558
7,000 1.20 1.12 1.12 1.20
1.12
0.99

1.20 1.20 1.20

6,000 1.12 1.12 1.00
1.05

5,000
0.80
0.92

4,000
0.60
3,000 5,048
3,165 4,549 0.40
2,000
2,371
1,009 1,169 2,634 3,789 0.20
1,000
1,365 1,735
0 0.00
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2040 2045 2050

Source: EYP Analysis

Key notes for the analysis

01 Projected decreasing EU emission intensity is based on average step reduction every five years.

30 Unlocking green steel demand

Given the high emission intensity differential between Indian and EU steel, the tightening EU benchmarks, phased reduction of
free allowances, and projected carbon pricing increase, the financial impact of CBAM on India’s steel sector is expected to be
substantial:

■ Projected cost impact: The cost burden could reach US$1,009 million by 2026, increase to ~US$2,400 million by 2030,
and further escalate to ~US$14,500 million by 2050.

■ Pressure on Indian steel exporters: These rising costs create significant pressure on Indian steel producers to adopt low-
emission technologies and align with EU standards to maintain export competitiveness.

■ Impact on EU importers: Sectors in the EU that import large quantities of steel—such as construction, automobile, and
infrastructure companies—will bear higher prices, affecting their supply chains and increasing overall project costs.

This highlights the necessity for Indian steel manufacturers to invest in carbon reduction strategies to mitigate long-term
compliance costs and adapt to a more carbon-regulated trade landscape.

31

Unlocking green steel demand 31

 Policy mechanism for steel
decarbonization in India
06 With carbon regulation tightening globally, notably
through mechanisms like the European Union’s
Carbon Border Adjustment Mechanism (CBAM) and
the United States’ Inflation Reduction Act (IRA),
Indian policymakers are increasingly discussing
ways to advance decarbonization in the steel sector.
CBAM, which effectively levies a carbon cost on
high-emission imports into the EU, sets a clear
signal for nations to adopt similar mechanisms
to ensure competitiveness in carbon-regulated
markets. This section explores potential policy
mechanisms India could adopt to support steel
decarbonization, focusing on the establishment of
carbon pricing systems, incentives for low-carbon
technology adoption, and mandates to encourage
industry participation.

Carbon pricing mechanisms

Carbon pricing is emerging as a critical tool for
incentivizing emissions reduction across high-
emission industries like steel. These include:
■ Carbon Border Adjustment Mechanisms
(CBAM): Under CBAM, imports into the EU are
taxed based on carbon emissions unless the
originating country has an equivalent carbon
tax. This approach encourages countries
exporting to the EU to adopt carbon pricing
mechanisms or risk facing additional tariffs.
For India, implementing a carbon tax or carbon
pricing mechanism would not only ease the
financial impact of CBAM on steel exports
but also create a consistent policy framework
domestically.
■ Proposed Indian Carbon Credit Trading
Scheme: India is exploring its own carbon
credit trading scheme, which would price
carbon emissions and allow companies to
trade carbon credits based on their emissions
profile, meaning firms that emit less than their
allocated carbon limit can sell excess credits,
while those exceeding limits must buy credits
to comply with regulations. This mechanism
could help industries like steel (once included
in the CCTS) offset some costs and fund
decarbonization projects, as revenue from

32 Unlocking green steel demand

 selling surplus carbon credits can be used to mitigate
compliance costs and invest in cleaner technologies.
■ Incentivize efficiency: Companies exceeding
emission standards would need to purchase credits, Green steel demand creation
encouraging them to adopt efficient, low-emission
India can adopt demand-side policies to create a robust
processes.
market for green steel:
■ Revenue generation for green projects: Funds ■ Green public procurement: Governments can mandate
generated through this scheme could be allocated the use of green steel in public infrastructure projects to
to support renewable energy, carbon capture and create a stable demand.
emissions reduction research.
■ Minimum green steel quotas: Set procurement
targets for green steel in construction,
transportation and defense projects, ensuring
steady market growth.
■ Green steel purchase agreements: Long-term
Regulatory mandates for decarbonization contracts between producers and government to
India could adopt regulatory mandates similar to those in ensure demand stability.
the EU and U.S. to drive decarbonization in the steel sector.
These include:
■ Emissions intensity targets: Set emission intensity
reduction targets, similar to the EU’s top 10%
benchmark, would pressure steel companies to adopt
Financial incentives for low-carbon technology
best practices and technologies.
Incentives are essential to accelerate adoption of cleaner
■ Sector-specific targets: Define benchmarks for
technologies in the steel industry, given high upfront costs:
emission intensity based on international standards
■ Capital Subsidies for Low-Carbon Technology: Like the
would make Indian steel more competitive globally.
IRA of US, which provides tax credits for low-emission
■ Mandated reporting and transparency: Require technology, India could subsidize initial investments in
companies to disclose emissions and energy green steel technologies, such as:
consumption data, promoting accountability and
■ Electric Arc Furnaces (EAF): A more efficient
allowing policymakers to track industry progress.
alternative to blast furnaces, EAFs can significantly
■ Renewable energy requirements: Implement renewable reduce emissions.
energy mandates for large industrial producers would
■ Hydrogen-based steelmaking: Supporting pilot
reduce fossil fuel dependency and lower carbon
projects and R&D for hydrogen-based steelmaking
emissions.
could make India a leader in green steel.
■ Examples: Policies could mandate a percentage of
■ Tax incentives and accelerated depreciation: Providing
renewable energy in operations, as seen in sectors
tax relief for companies investing in low-carbon
impacted by CBAM and the IRA.
equipment and processes could enhance adoption rates.
■ Renewable purchase obligations: Steel companies
■ Green bonds and financing options: Issuing green
could be required to meet a portion of their energy
bonds specifically for the steel industry could channel
demand through renewables, supported by state and
funds into renewable energy and emissions-reducing
central governments through incentives.
technology.
■ Example: The EU and China have successfully
issued green bonds that provide low-interest
financing for green infrastructure projects, and
India could replicate this model to support steel
decarbonization.

33

Unlocking green steel demand 33

34 Unlocking green steel demand
 Collaborative industry-government initiatives
A collaborative approach involving both industry stakeholders
and the government is vital for successful decarbonization:
■ Public-Private Partnerships for technology R&D:
Collaboration between government and industry in
research and development could advance green steel
technologies, such as carbon capture, utilization, and
storage (CCUS).
■ Sectoral roadmaps and incentives: Creating roadmaps
with clear decarbonization milestones for each industry,
along with financial and technical support, would guide
companies on a structured path towards net zero
emissions.
■ Industry-led standards: Encouraging industries to
develop voluntary emissions standards that could
be later adopted as formal benchmarks, promoting
Aligning India’s policy framework with global proactive compliance and a smooth transition.
regulations
Global carbon regulations impact key Indian export sectors,
creating a need for policy alignment to stay competitive:
■ Adopting CBAM-like mechanisms: India could
implement a CBAM-equivalent policy, placing a carbon
Strengthening India’s position in global low-carbon
cost on imported goods with high emissions. This
markets
approach would help protect domestic steel producers
from international competition while encouraging carbon Decarbonization policies would position Indian steel as a
reduction. competitive player in low-carbon global markets:
■ Export competitiveness in the EU: With the EU applying
■ Impact on chemical and cement sectors: In addition
CBAM, low-emission steel exports would avoid carbon
to steel, similar policies could impact other high-
costs, giving Indian steel companies a competitive edge.
emission sectors like chemicals and cement, which
are significant contributors to India’s GDP and ■ Access to green funding: International investors
export revenue. increasingly favor companies with strong ESG
performance. A strong decarbonization policy would help
Indian companies attract foreign investment, further
Case study: Green Hydrogen in the IRA: The Inflation
bolstering the domestic steel sector.
Reduction Act of the US has prioritized green hydrogen
production, offering substantial tax credits to incentivize
low-carbon hydrogen technologies. This legislation is aimed To remain competitive and align with international carbon
at significantly reducing carbon emissions in the industrial standards, India’s steel sector must adopt a multifaceted
sector, particularly in steelmaking, where hydrogen can decarbonization strategy. A comprehensive policy
replace traditional fossil fuels. India could adopt a similar mechanism that incorporates carbon pricing, mandates and
approach by promoting green hydrogen initiatives, fostering incentives will ensure that India’s steel industry can transition
partnerships with technology developers, and providing to lower emissions and retain its market share globally.
financial incentives for the development of hydrogen
infrastructure to support cleaner steel production.

35

Unlocking green steel demand 35

 Recommendations
07 The decarbonization of the Indian steel sector
is imperative not only for meeting domestic
climate commitments but also for enhancing
international competitiveness, particularly in light
of global initiatives such as the European Union’s
Carbon Border Adjustment Mechanism (CBAM).
To achieve meaningful reductions in emissions
while accommodating projected increases in steel
demand, a multifaceted approach is necessary.
Below are strategic recommendations aimed at
fostering the transition to a sustainable steel
industry in India.

Recommendations to government

■ Incentivizing green steel production: Provide

subsidies and tax breaks for green steel
production technologies, such as H2 DRI and
electric arc furnaces powered by renewables, to
reduce the green steel premium to US$7/ton by
2030 compared to the current US$210/ton.
■ Enhance export competitiveness: Offer
financial support and incentives for steel
producers to meet EU emission benchmarks,
reducing emission intensity from 2.55 tons of
CO2₂ per ton of steel to 1.20 tons by 2030.
■ Carbon pricing mechanism: Implement a
carbon pricing mechanism, with carbon
price cost of US$90 to US$100 by 2040,
to internalize the external costs of carbon
emissions and encourage industries to adopt
low-carbon technologies and practices.

36 Unlocking green steel demand

 ■ Willingness to pay premium: Advocate for the adoption
of green steel despite a minor production cost increase
of just 3.7% to 5.2% in automobile, construction and
infrastructure sectors, emphasizing the environmental
Recommendations to the industry benefits and long-term value.

■ Adopting low-emission technologies: Transition to ■ Adopt green steel across all projects: Promote the use
low-emission technologies to meet EU benchmarks of green steel in all types of projects, aiming to meet
and maintain export competitiveness, aiming to reduce the projected demand of 179.17 million tons by FY50,
emission intensity from 2.5 tons of CO2₂ per ton of steel to reduce the overall carbon footprint and advance
to 1.21 tons by 2030. sustainable practices. Green steel can be adopted in
green building projects in construction sector.
■ Increase green steel production: Scale up green steel
production to meet the projected demand of 179.17 ■ Collaborate with the suppliers: Work closely with steel
million tons by FY50, focusing on H2 DRI and other suppliers to ensure a steady green steel supply and
innovative production routes to bridge the supply- negotiate favorable terms, facilitating cost management
demand gap. and availability for all projects.

■ Investing in R&D: Allocate resources for research and Decarbonizing the Indian steel sector presents both
development to innovate and improve green steel challenges and opportunities. By implementing a
production technologies, with the goal of reducing green comprehensive set of recommendations that encompass
steel production costs by 30% by 2040. policy frameworks, technological advancements, financial
■ Adoption of cost-saving emission reduction incentives and collaborative efforts, India can position itself
technologies: Implement energy efficiency and process as a leader in sustainable steel production. The transition to
reconfiguration measures based on “in the money” green steel is not only a necessity in light of global carbon
technologies for cost savings, with banks investing reduction mandates but also a strategic opportunity to drive
US$72 to US$108 billion to support these efforts. economic growth and secure India’s role in the global steel
market. With proactive measures and a commitment to
innovation, India can successfully navigate the path towards
a sustainable and resilient steel industry.

Recommendations to end-use sectors

■ Green steel procurement: Encourage the automotive

sector to start procuring green steel 10 years ahead of
their net zero targets and increase procurement by 10%
y-o-y, while construction and infrastructure companies
should adopt a certain percentage of green steel in their
operations.

37

Unlocking green steel demand 37

 About India Green Steel Coalition
The India Green Steel Coalition (IGSC) is a joint initiative of WWF-India and the Confederation of Indian Industry (CII) to accelerate
the transition to green steel manufacturing and consumption in India. IGSC aims to reduce the emissions intensity of India’s steel
production by 30% compared to 2023 levels by 2030.

As a multi-stakeholder platform representing ~70% of India’s crude steel production, IGSC brings together primary and secondary
producers, alongside demand-side players to drive sustainable transformation in this hard to abate sector. IGSC supports industry
dialogue through technical reports, capacity building sessions, actions groups on key topics like: renewable energy cluster
development for steel sector, and Carbon, Capture & Utilization (CCU); and international expert involvement through WWF network
offices.

By addressing key transition challenges and fostering industry-wide collaboration, IGSC will actively engage with policymakers to
shape an enabling environment for decarbonization while supporting India’s goal of increasing domestic steel production sustainably.

About WWF-India
WWF-India is a science-based organization which addresses issues such as the conservation of species and its habitats, climate
change, water and ecological footprint. Over the years, its perspective has broadened to reflect a more holistic understanding of
the various conservation issues facing the country and seeks to proactively encourage environmental conservation by working with
different stakeholders - Governments, NGOs, corporates and other relevant stakeholders.

WWF-India acknowledges the strong linkages of industry’s ecological footprint and its impact on nature and biodiversity. Hence,
we collaborate with industry partners to addressing such challenges and working on solutions that promote carbon mitigation and
adaptation solution. On the similar lines, WWF-India conceptualized India Green Steel Coalition under its “Decarbonization of Steel
Sector in India’ program that supports Indian Steel Industry to adapt to changing international regulations and standards.

About WWF Finland

WWF Finland is part of the global WWF network that has offices in about 50 countries and operations in over one hundred
countries. WWF Finland was established in 1972 and is now the most recognized environmental NGO in Finland. Alongside domestic
conservation projects, WWF Finland is working with WWF partners in Asia, Africa and South America. WWF Finland is hosting the
WWF global Steel Decarbonisation Workstream.

About CII- GBC

The CII – Green Business Centre (CII – GBC) is CII’s Developmental Institute for Green Practices and Businesses, focused on
offering world-class advisory services dedicated to the conservation of natural resources. Its mission is to help India emerge as a
global leader in green business by 2030.

The Centre promotes sustainable practices and supports businesses through a comprehensive range of services, including Green
Buildings, Energy Management Initiatives, Energy Efficiency Initiatives, GreenPro Certification, GreenCo Rating System, Green
Entrepreneurship Council (GEC), Solar Vendor Rating Program (VRP) etc.

indiagreensteelcoalition.org
ciiblog.in
PAGE 2

India Green Steel Coalition

Green Steel Production Pathways for India

Photo Credit: EY Parthenon
38 Unlocking green steel demand
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PAGE 3

Green Steel Production Pathways for India 39

Unlocking green steel demand 39

Driving Decarbonization through Industry Collaboration

An initiative of: