What are new guidelines for Green Hydrogen pilot projects in steel sector?

These projects are part of the National Green Hydrogen Mission and will be run by the Ministry of New and Renewable Energy

By Ground report 06 Feb 2024

New Update

What are new guidelines for Green Hydrogen pilot projects in steel sector?

The government has announced new pilot projects to reduce carbon emissions in the steel industry. These projects are part of the National Green Hydrogen Mission and will be run by the Ministry of New and Renewable Energy (MNRE) and the Ministry of Steel.

The projects will focus on three main areas. First, they will use hydrogen in the process of making iron. Second, they will apply hydrogen in blast furnace operations. And third, they will gradually replace fossil fuels with green hydrogen. The plan is to start with a small amount of green hydrogen and increase it over time as it becomes cheaper and technology improves.

The guidelines also stress that new steel plants should be able to operate using green hydrogen. This will help them compete in the future global market for low-carbon steel. The scheme also considers new projects that aim to produce 100% green steel.

The programme has allocated a budget of Rs 4.55 billion until 2029-30. They will distribute the money in three stages: giving out 20% when they award the project, 70% based on the project milestones, and the final 10% upon completion.

The pilot projects will facilitate the construction of the necessary infrastructure needed to use green hydrogen in the iron and steel industry. We expect this to establish a green hydrogen ecosystem within the steel industry. As the production costs of green hydrogen drop, we expect its usage in the steel industry to rise.

What are the new Guidelines?

The Ministry of New and Renewable Energy (MNRE) has outlined comprehensive guidelines for the execution of pilot projects focusing on the use of green hydrogen in the steel industry. These guidelines aim to facilitate the deployment of green hydrogen technologies and assess their viability in real-world operational conditions.

These projects will start by using a small amount of green hydrogen. New plants should be able to run entirely on green hydrogen.

The projects will be run by the Ministry of Steel and other agencies. These can include public and private sector companies, state corporations, research institutions, joint ventures, research labs, or groups of these.

Companies should be able to take a finished pilot project and turn it into a commercial operation. The selected projects will get funding for up to 50% of the total cost of equipment. If a group of independent steel producers and the DRI industry run the project, the government will cover 70% of the cost.

Objectives of the Scheme

The pilot projects will help identify any operational and technical issues. This information will be used when scaling up the use of green hydrogen. The scheme aims to make use of existing resources and infrastructure for transporting, storing, and using green hydrogen and its by-products in the steel industry.

Advancing technologies for the utilization of green hydrogen in steelmaking processes.
Supporting the deployment of green hydrogen and its derivatives on a pilot basis.
Validating the technical feasibility and performance of green hydrogen in iron and steel manufacturing.
Evaluating the economic viability of green hydrogen utilization in the steel sector.
Assessing the performance of green hydrogen-based low-carbon steel and identifying areas for improvement.
Demonstrating safe and secure operations of green hydrogen production for low-carbon steel.

Challenges in transitioning to Green Hydrogen

While green hydrogen is the cleanest way to produce steel, it is also expensive. Steelmakers need to invest in the technology, which could make them less competitive.

For Indian steelmakers to switch from coal-based steelmaking, the cost of green hydrogen needs to come down. There also needs to be a cost penalty for carbon emissions.

Injecting hydrogen gas into traditional blast furnaces can reduce carbon dioxide emissions. However, burning hydrogen produces less heat than coke.

Indian Steel Majors Shifting to Greener Steel

Tata Steel is working on a long-term plan to reduce emissions. This includes reducing emissions, capturing and using carbon, making steel with hydrogen, increasing the use of renewable energy, and using more scrap metal to make steel.

JSW Steel signed a seven-year contract with JSW Energy to receive green power from a hydrogen plant that is being set up at its Vijayanagar plant.