Green steel refers to low-carbon steel produced using eco-friendly technologies like hydrogen-based Direct Reduced Iron (H-DRI) and renewable-powered Electric Arc Furnaces (EAFs). These methods aim to cut CO₂ emissions, promote recycling, and support India’s net-zero emissions 2070 goal. India defines green steel as any finished product emitting under 2.2 tCO₂e/tfs, establishing a clear sustainability benchmark and helping in Decarbonization.
Key technologies
1. Hydrogen based direct reduced iron
It is an eco-friendly production method where hydrogen is used instead of coal as the reducing agent to convert iron ore into iron. This process significantly reduces carbon emissions, making it a key technology in producing Green Steel. By using hydrogen, which emits only water vapor when burned, the steel industry can move towards more sustainable practices and align with global climate goals. JSW Steel and Jindal Steel Duqm are actively investing in H-DRI-based complexes.
2. Renewable-powered electric arc furnaces
These are meant for the sustainable method of steel production that uses electricity from renewable sources to melt scrap steel, which helps in recycling which helps in reducing emissions substantially. India plans to raise scrap usage from 15% to 50% by 2047. AM/NS India is scaling up its scrap recycling process to support this shift.
3. Carbon capture, utilization, and storage (CCUS)
This is an innovative technology aimed at reducing carbon dioxide emissions from industrial processes, including steel making. Though costly, India is piloting CCUS projects to capture and reuse CO₂.
India’s green steel mandate
From FY2028, all central government and centrally sponsored projects must use green steel where procurement exceeds ₹1 crore. This eight-year mandate requires:
At least 20% of steel to be rated 3-star or higher (emitting ≤2.2 tCO₂/t)
5% of that to be 4-star or higher (≤2.0 tCO₂/t)
1% to be 5-star (<1.6 tCO₂/t)
This policy supports sectors like Railways, Defence, Housing, and Infrastructure, where steel demand is high, aligning public procurement with sustainability goals.
Green steel classification
India became the first country to officially define green steel with its taxonomy, published in December 2024. This categorization, based on CO₂ emissions, sets standards for star ratings:
5-Star: <1.6 tCO₂/t (Very Low Emissions)
4-Star: 1.6–2.0 tCO₂/t (Low Emissions)
3-Star: 2.0–2.2 tCO₂/t (Qualifying Green Steel)
The National Institute of Secondary Steel Technology (NISST) oversees MRV (measurement, reporting, verification), issuing ratings and certificates. To scale operations, NISST may outsource audits to maintain transparency.
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Pioneers in sustainable steel
Lloyds Metals & Energy (LMEL):
LMEL’s Surjagarh Iron Ore Mines earned a 5-star green rating for eco-friendly mining (e.g., LNG vehicles, electric drills). The company has clearance to expand capacity from 10 MTPA to 26 MTPA, targeting 55 MTPA. Plans for pellet and steelmaking indicate vertical integration potential.
ArcelorMittal Nippon Steel India (AM/NS):
With a ₹60,000 crore investment, AM/NS aims to scale Hazira capacity from 9 MTPA to 15.6 MTPA. Targeting 70% green steel production by 2027 and 1.8 tCO₂/t by 2030, the company already operates at 2.17 tCO₂/t. Their transition includes renewable energy from hybrid projects and expanded scrap recycling.
JSW Steel / JSW Green Steel:
JSW plans a 10 MTPA green steel facility at Salav Works with a ₹50,000–60,000 crore investment. A 25 MW hydrogen pilot at Vijayanagar supports its goal of reducing emissions by 42% (vs 2005) and reaching 1.95 tCO₂/t by 2030. The company is also building 10 GW green energy capacity.
Jindal Steel & Power (JSPL):
Domestically, JSPL is building a ₹3,600 crore greenfield plant in Odisha (part of a ₹15,000 crore plan). Internationally, Jindal Steel Duqm in Oman is developing a $3 billion, 5 MTPA hydrogen-ready plant. Hydrogen injection starts 2033, targeting 10–15% usage by 2035. JSPL aims for net-zero by 2035/2047.
Company highlights & Stock implications
| Company | Key Initiatives | Targets & Emissions | Achievements | Stock View |
|---|---|---|---|---|
| LMEL | 5-star mine; mining expansion | Steel target TBD | First 5-star rated mine | May benefit from vertical integration |
| AM/NS | ₹60k Cr investment; RE & scrap use | 1.8 tCO₂/t by 2030 | Leading low-carbon producer | Strong ESG inclusion potential |
| JSW | ₹50–60k Cr project; hydrogen pilot | 1.95 tCO₂/t by 2030 | CBAM-aligned, EU-ready | Likely to gain green premium |
| JSPL | ₹3,600 Cr Odisha + Oman plant | Net-zero by 2035/2047 | Global green strategy | Potential ESG rerating |
Global ties & Policy push
India is negotiating joint green steel and hydrogen projects with the UAE under CEPA.
Ongoing green hydrogen pilots and updated steel taxonomy reinforce India’s leadership in sustainable steelmaking.
Potential risks
High capital intensity may lead to overruns.
Hydrogen and RE cost volatility.
Execution timelines are critical to meet FY28 targets.
Global competition and compliance (e.g., EU CBAM) may shift trade flows.
Forging the Future
India’s green steel revolution is more than decarbonization, it’s the blueprint for 21st-century industrial leadership. As hydrogen replaces coal, scrap fuels growth, and emissions become a trade metric, India isn’t just catching up, it’s setting the pace. What was once a heavy, carbon-intensive sector is now evolving into a nimble, tech-driven force for climate resilience and economic strength. In this transformation lies not just steel, but the future itself.
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