The Ministry of New and Renewable Energy said on February 2 that it will implement pilot projects using green hydrogen to replace fossil fuels in steel production in a step towards sustainable and cleaner energy practices in the sector.
The government of India has come out with guidelines for these pilot projects.
Three key areas have been identified for the pilot projects: use of hydrogen in the direct reduced ironmaking process, use of hydrogen in blast furnaces, and gradually substituting fossil fuels with green hydrogen.
Moneycontrol explains how the new measures will help pivot towards greener steel and the challenges in implementation:
What are the new guidelines?
As per the National Green Hydrogen Mission document, the pilot projects in existing steel plants can begin by blending a small percentage of green hydrogen in their processes while upcoming plants should be capable of operating with green hydrogen.
These pilot projects will be implemented through the ministry of steel and Scheme Implementing Agencies. The executing agencies can be central and state public sector units, the private sector, state corporations, Indian R&D institutions, joint ventures, research labs, or consortiums.
The companies should have the capability to take forward a completed pilot project towards commercialisation. The selected pilot projects will receive funding for capital equipment not exceeding 50 percent of the total cost. However, 70 percent of the cost will be borne by the government in case of a consortium of independent steel producers and DRI (direct reduction of iron) industry.
What are the objectives of the scheme?
The pilot projects will serve to identify operational and technical gaps and the inputs will be utilised while scaling up commercial deployment of green hydrogen. The scheme aims to leverage existing resources and infrastructure available for transport, storage and use of green hydrogen and its derivatives in the iron and steel sector.
According to the MNRE, the use of green hydrogen and its derivatives in the steel sector through the proposed pilot projects will lead to the development of infrastructure such as refuelling stations, storage and distribution networks, resulting in the establishment of a green hydrogen ecosystem in the sector.
What are the challenges in transitioning towards green hydrogen?
Although the green hydrogen-based route is the cleanest method of producing steel, it is expensive and steelmakers need to invest in the technology, which could render them uncompetitive.
For Indian steelmakers to switch from coal-based steelmaking, the cost of green hydrogen needs to be reduced and there needs to be a price penalty on carbon emissions, according to a report from the Institute of Energy Economics and Financial Analysis.
Injection of hydrogenous gases in traditional blast furnaces is a means to reduce carbon dioxide emissions but combustion of hydrogen produces less heat than coke.
How are Indian steel majors making the shift to producing greener steel?
Tata Steel is working on a long-term plan for decarbonisation, which primarily entails reducing emissions, carbon capture and utilisation, hydrogen-based steelmaking, increased share of renewable energy generation, and higher use of scrap to manufacture steel.
JSW Steel has signed a seven-year contract with JSW Energy to source green power from a 3,800-tonne hydrogen plant being set up by the latter at its Vijayanagar plant
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