As India scales its steel capacity toward a 300 million ton target by 2030, a report from The Energy and Resources Institute (TERI) titled “Green Steel by 2030: Building the business case for the first green steel plant in India” provides the definitive roadmap for a low-carbon industrial revolution.
The report moves beyond theory to offer a project-level financial blueprint for bridging the green premium that currently stalls commercial-scale investment.
The financial bridge: a policy stack approach
The central challenge for Indian steelmakers is the higher cost of production using clean energy versus traditional coal. TERI’s analysis shows that the green premium—estimated at roughly $210 per ton today—can be neutralized through a coordinated policy stack. By combining capital cost subsidies (viability gap funding), concessional low-interest finance, and guaranteed offtake, the government can make first-of-a-kind (FOAK) plants bankable for private investors.
Technology: the hydrogen-DRI pathway
India is uniquely positioned to lead via the hydrogen-based direct reduced iron (H₂-DRI) route paired with electric arc furnaces (EAF). This pathway can slash emissions by up to 97%. While current green hydrogen prices exceed $3.00/kg, TERI’s business case identifies a break-even threshold of $1.50–$2.00/kg. Until technology scales to reach this price, the policy stack acts as a critical bridge to prevent India from locking in high-carbon coal assets for the next 30 years.
Demand: government as the anchor customer
A primary lever in the business case is green public procurement (GPP). The report projects that by mandating green steel in public infrastructure—railways, bridges, and urban housing—the government can create a guaranteed market of 10.6 million tons by 2031. This demand pull provides the long-term revenue visibility required for steel giants like SAIL, Tata Steel, and JSW to commit to ₹6,000 crore ($720 million) commercial-scale pilots.
“The transition to green steel represents both a significant challenge and a tremendous opportunity for India’s industrial sector,” said authors Will Hall, Sidharth Sinha, and Mayank Aggarwal. “By providing transparent, real-world financial analysis, this report bridges existing knowledge gaps and provides a roadmap to accelerate the transition from pilot initiatives to commercial-scale projects.”
Comparison of financial policy levers:
| Lever | Mechanism | Role in 2030 Business Case |
| Offtake | Green Public Procurement (GPP) | Acts as the anchor buyer to ensure project bankability. |
| VGF | Viability Gap Funding | Direct grants to lower the high CAPEX of early-stage electrolyzers. |
| CCTS | Carbon Credit Trading Scheme | Penalizes coal-based routes; rewards low-emission, star-rated steel. |
| Finance | Concessional Blended Finance | Uses multilateral funds to lower the $WACC$ for private developers. |
Aligning with the national taxonomy:
The business case aligns with India’s green steel taxonomy, which uses a star rating based on carbon intensity. To achieve a 4-star rating ($1.6 – $2.0/tCO₂/tfs), plants must move beyond operational efficiency to deep decarbonization. TERI’s roadmap suggests that with the right support, India can become the first major economy to industrialize without the associated carbon footprint.
