India's ambitious drive to produce "green steel," a crucial step towards its 2070 net-zero emissions target, faces a significant roadblock. The Union Finance Ministry is reportedly demanding substantial cuts in green hydrogen prices before it commits vital financial incentives for clean energy-based steel manufacturing. This cautious approach, according to sources privy to discussions, stems from broader efforts to manage inflation and government spending.

The Finance Ministry is concerned that the high costs associated with green hydrogen, a key component in eco-friendly steel production, could make the initiative economically unviable and "potentially inflationary." It emphasised the need for a "balanced approach between growth and sustainability," cautioning against a "hasty approach" to policy implementation, given steel's role as an intermediate product, reported India Today.

India, the world's second-largest steel producer, aims to boost crude steel capacity to 300 million tonnes by 2030-31. The sector, contributing 10-12% of India's total carbon emissions is vital for the nation's decarbonization goals.

Green hydrogen's current cost in India, estimated at Rs 350-450 per kilogram, dwarfs that of conventional grey hydrogen (Rs 150-200/kg). This price disparity is the core of the Finance Ministry's hesitation. A delay in federal support could significantly impede India's energy transition. While the Steel Ministry pushes for incentives, the silence from both ministries on future plans leaves uncertainty. This highlights the complex balancing act India faces in reconciling economic growth with its urgent environmental commitments.

Sources:

• Government seeks lower energy costs for backing green steel incentives: Report
• India confident of achieving steel production target by 2030: Poundrik
• Green Hydrogen | Benefits to Economy & Environment | thyssenkrupp Uhde India