Green hydrogen cost in India to fall to $2 per kg by 2032: Mission director

The production cost of green hydrogen has been progressively coming down and it will eventually hit $2 per kilogram by 2032, paving the way for decarbonisation of the steel sector in India, Abhay Bakre, director, National Green Hydrogen Mission said on Tuesday.

 

Green hydrogen is being seen as a key solution to tackle the issue of decarbonisation in sectors like heavy industries, steel, and refineries. Starting January 1, 2026, the European Union is set to impose a carbon tax (called Carbon Border Adjustment Mechanism) on Indian steel, aluminium and several other carbon-intensive goods.

 

Currently, the steel sector uses fossil fuels, primarily coal, to heat furnaces to produce steel from iron ore.

   

But, Bakre said that it would require sorting key issues hurting the uptake of green hydrogen in hard-to-abate sectors like steel, Bakre said.

 

“The way we are going ahead, I am sure the cost of green hydrogen will also keep coming down and by 2032 or 2035 it will be almost on a par with any other hydrogen like brown hydrogen. That will pave the way for the best option for the decarbonisation of the steel sector,” Bakre said, speaking at an industry event here.

 

The issue of affordability of green hydrogen must be seen in the context of issues typically faced in the adoption of a new technology, including high risk, lack of long-term offtake, and the lack of effective policies.

 

“We have seen a revolution in the form of decreasing solar costs, which have come down to around ₹2 per unit. This happened because these were large capex projects and long-term offtake was available. Also, policies were eased out and connectivity issues were resolved,” Bakre said. 

 

The Green Hydrogen Mission, set up under the aegis of the Ministry of New and Renewable Energy (MNRE), aims to make India a global hub for green hydrogen production, usage, and export by 2030, targeting 5 million tonne production capacity.

 

“The option to use green hydrogen in the steel sector is most feasible in terms of not just boosting the overall growth of the sector, but also getting a solution which will become viable and affordable in due course,” Bakre said.

 

He also said the recent low price discovery at a green ammonia tender issued by the Solar Energy Corporation of India (SECI) occurred because of the strong policy backing from the government. 

 

Last month, SECI had received a bid of ₹55.75 per kg in the first auction for procurement of green ammonia under the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme of the green hydrogen mission.

 

The programme consists of two financial incentive mechanisms to support domestic manufacturing of electrolysers and production of green hydrogen with an outlay of ₹17,490 crore up to 2029-30.

 

The government has allocated ₹455 crore for implementation of pilot projects for use of hydrogen in the iron and steel sector under the National Green Hydrogen Mission.

 

The ministry of steel has awarded five pilot projects for use of hydrogen in the steel sector focusing on partial substitution of natural gas with hydrogen in Direct Reduced Iron (DRI) production, and injection of hydrogen into existing blast furnaces to reduce coal and coke consumption.