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The EY Parthenon report projects a dramatic rise in India’s green steel demand — from negligible levels today to 4.49 million tonnes by FY2030, and further to 73.44 MT by FY2040.
Conventional steel, produced via the blast furnace-basic oxygen furnace (BF-BOF) route, is likely to become significantly more expensive as carbon pricing kicks in, says the report.
Green steel demand in India is projected to skyrocket to 179 million tonnes by FY2050 from the negligible levels currently, driven by rapid infrastructure growth, booming construction, and a climate-conscious auto sector, according to a new EY Parthenon report.
Released in collaboration with WWF-India and CII-Green Business Centre, with support from the India Green Steel Coalition (IGSC), the report titled ‘Unlocking Green Steel Demand: An Assessment of India’s Automotive, Infrastructure and Construction Sectors’ outlines how India’s green transition in steel could become both an environmental and economic imperative.
Green Steel Demand to Reach 179 Million Tons by FY2050
The report projects a dramatic rise in India’s green steel demand — from negligible levels today to 4.49 million tonnes by FY2030, and further to 73.44 million tonnes by FY2040, before touching 179 million tonnes by FY2050.
The construction sector is expected to lead the initial uptake, followed by infrastructure and automotive segments. As of now, construction and infrastructure together account for 78% of India’s steel consumption, which currently stands at 136 million metric tonnes. This figure is expected to rise to 390 million tons by FY2050, reflecting India’s urbanisation push and infrastructure goals.
“Moving to green steel is no doubt a big shift—it comes with its challenges, but also opens up huge opportunities for India’s industrial sector,” said Kapil Bansal, Partner – Energy Transition and Decarbonization, EY Parthenon.
Cost of Carbon to Redefine Steel Economics
Green steel, typically made using hydrogen-based Direct Reduced Iron (DRI) or electric arc furnaces powered by renewables, currently comes at a premium. The report pegs the green steel premium at around $210 per tonne, resulting in modest cost hikes — 4.1% for automotive, 3.7% for construction, and 5.2% for infrastructure.
However, this premium is expected to fall below 1% by 2035-2040, as green hydrogen becomes cheaper and production scales up.
In contrast, conventional steel, produced via the blast furnace-basic oxygen furnace (BF-BOF) route, is likely to become significantly more expensive as carbon pricing kicks in. Traditional steel prices could rise 81% by 2050, from today’s $660 per tonne to $1,193 per tonne, under escalating carbon tax regimes.
CBAM Could Cost Indian Exporters Over Rs 19,000 Crore by 2030
The report flags the European Union’s Carbon Border Adjustment Mechanism (CBAM) as a major concern for Indian steel exporters. With India’s average emission intensity at 2.5 tonnes of CO₂ per tonne of steel, compared with the EU benchmark of 1.28 tonnes, exporters could be taxed heavily if carbon intensity is not lowered.
Without urgent decarbonisation, Indian steel exports could incur CBAM-related taxes of Rs 19,277 crore by 2030, eroding global competitiveness.
Strategic Roadmap: What Needs to Be Done
The study outlines clear recommendations for policymakers, the steel industry, and major steel-consuming sectors:
Government
- Introduce carbon pricing at $90–100 per tonnes by 2040
- Offer subsidies and tax breaks for green steel technologies
- Set regulatory mandates aligned with global emissions norms
Steel Industry
- Cut emissions intensity to 1.21 tons CO₂/ton by 2030
- Scale up production using hydrogen-based DRI and other clean methods
- Invest in R&D to lower production costs by 30% by 2040
End-Use Sectors (Construction, Infra, Auto)
- Start green steel procurement a decade before net-zero targets
- Absorb marginal cost increases for long-term gains
- Work closely with suppliers to ensure availability
Technology Gaps and Supply Risks
While hydrogen-based DRI and scrap-fed electric arc furnaces powered by renewable energy are considered the future of green steel, India currently lacks the scale to meet projected demand. The report warns of a looming supply-demand gap, unless massive investments are made in green steel infrastructure, innovation, and raw material supply chains.
As India eyes 500 million tonnes per annum of steel capacity by 2047, aligning with climate commitments under the Paris Agreement, the green steel transition is not just an environmental goal — it’s an economic necessity.
“What once felt like a nice-to-have for sustainability is fast turning into a business must-have,” Bansal noted, underscoring how rising carbon costs and shifting global norms are pushing green steel into the mainstream.
With decisive action from all stakeholders — government, industry, and end-users — India could emerge not just as a steel powerhouse, but as a leader in sustainable industrial transformation.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
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