Q1. What is Green Steel?

Ans: Green Steel refers to steel produced using low-emission energy sources instead of traditional fossil fuels like coal. One of the most promising methods to produce green steel is by using Green Hydrogen, which emits only water vapor when used as an energy source, drastically reducing the carbon footprint of steel production.

Q2. Why is There a Need for Green Steel?

Ans: Steel manufacturing is one of the biggest contributors to global carbon emissions, producing about 1.85 tonnes of CO₂ per tonne of steel. With increasing global focus on reducing emissions, there’s a push towards more sustainable production methods. Green steel can play a critical role in helping India meet its climate goals while also positioning itself as a global leader in sustainable manufacturing.

Q3. Why is the Government Planning to Offer Incentives for Green Steel?

Ans: Producing green steel is expensive due to:

• High Cost of Green Hydrogen: The production and distribution of green hydrogen require advanced technology, which is currently costly.
  
  
• Need for New Infrastructure: Transitioning from traditional coal-based furnaces to hydrogen-based production involves significant infrastructure changes.

To make green steel a reality, the government is planning to introduce a package of incentives, such as soft loans, subsidies, and viability gap funding. These incentives, once implemented, will help reduce costs for companies willing to adopt green steel technology, making the transition feasible.

Q4. How Will Green Steel Incentives Benefit the Green Hydrogen Supply Chain?

Ans: A government-supported shift towards green steel would lead to an increase in demand for green hydrogen, which is a key component in sustainable steel production. This would directly benefit companies in the green hydrogen supply chain, including:

• Green Hydrogen Producers: With higher demand, companies producing green hydrogen will experience growth, likely driving down production costs through economies of scale.
  
  
• Hydrogen Infrastructure Companies: As more steel manufacturers adopt green hydrogen, there will be a greater need for hydrogen transport, storage, and distribution infrastructure, creating new business opportunities.
  
  
• Technology Providers: Companies that provide electrolyzers and other hydrogen production equipment will see increased demand, leading to expansion and technological advancement in this sector.

Q5. What is the Risk if India Doesn’t Transition to Green Steel?

Ans: Failure to transition could have several consequences:

• European Carbon Tariffs: Europe, a key export market for Indian steel, is implementing the Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on high-emission imports. If Indian steel doesn’t meet EU’s green standards, it could face an additional tax of $65–$70 per tonne, making it less competitive.
  
  
• Lost Market Share: If Indian steel becomes more expensive due to carbon tariffs, buyers may turn to greener alternatives from other countries, impacting India’s steel export revenues.
  
  
• Environmental Impact: Continued reliance on coal for steel production will worsen India’s carbon emissions, challenging its climate commitments and increasing domestic pollution levels.

Q6. What Steps is the Government Considering to Promote Green Steel?

Ans: The government is in discussions to introduce several measures to encourage green steel production:

• Incentive Packages: Considering financial support through soft loans, interest subsidies, and production-linked incentives to offset the high initial costs of green steel production.
  
  
• Public Procurement Priority: Planning to prioritize green steel in government projects, ensuring a steady demand that makes the switch more attractive for manufacturers.
  
  
• Setting Clear Timelines: Mandating timelines for the industry to transition to cleaner technology, creating a clear path for companies to adopt green hydrogen in their steel production processes.
  
  
• Aligning with Global Standards: Defining green steel standards aligned with international carbon benchmarks, helping Indian steel remain competitive in the global market.

Q7. How Much Investment is Needed for India’s Green Steel Transition?

Ans: According to Moody’s, transitioning India’s steel industry to green production methods will require investments between $190–$215 billion. This amount will not only support the development of green hydrogen technology but also cover the infrastructure needed to integrate green hydrogen into steel production.

Potential Beneficiaries in the Unlisted Space:

Companies involved in the green hydrogen supply chain could see substantial growth if these incentives are implemented. Greenzo and Matrix Gas, operating in the unlisted space, are well-positioned to benefit from the increased demand for green hydrogen and related technologies as the shift towards green steel gains momentum.