India is ramping up efforts to finance green steel projects, heralding a new era in the steel industry with hydrogen emerging as a transformative alternative to traditional coal-based methods.
Initiatives are underway to explore various funding options, including the potential implementation of lower interest rates specifically tailored for upcoming capital-intensive green steel ventures. Green steel, distinguished by its significantly lower carbon footprint, has emerged as a focal point in India’s sustainability agenda, aligning with global efforts to reduce greenhouse gas emissions. A senior official familiar with the ongoing discussions revealed that proposals to adjust existing financing rates by banks are being considered. Under this scheme, interest rates for green steel projects, meeting predetermined sustainability criteria, could be marginally reduced from the standard rates. “Several Ministerial clearances are necessary, and financial institutions must be onboarded for this proposal to materialise,” the official explained.
The establishment of a green steel project incorporating hydrogen technology is perceived to entail double the investment compared to traditional steel plants. While the construction cost for a conventional steel plant with a one million-tonne annual capacity stands at approximately $1 billion, setting up a similar green steel plant ranges between $2-2.5 billion. Despite the higher initial investment, green steel projects hold the promise of long-term environmental and economic benefits, contributing to India’s transition towards a more sustainable and resilient industrial landscape. By embracing innovative funding mechanisms and leveraging hydrogen technology, India aims to position itself at the forefront of the global green steel revolution, driving progress towards a carbon-neutral future. As discussions continue and regulatory frameworks evolve, stakeholders remain optimistic about the transformative potential of green steel initiatives, underscoring the importance of collaborative efforts between government agencies, financial institutions, and industry players to facilitate the transition to a greener and more sustainable steel sector.
