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Guidelines for Green Hydrogen in Steel Sector

Context
The Ministry of New and Renewable Energy has released guidelines for implementing pilot projects under the National Green Hydrogen Mission. The scheme focuses on integrating Green Hydrogen in the steel sector, aiming to replace fossil fuels and feedstock. The initiative, operational until FY 2029-30, emphasizes key thrust areas, encourages a blending approach, and supports upcoming steel plants capable of operating with green hydrogen, fostering a transition toward sustainable steel production.

Guidelines for Green Hydrogen in Steel Sector: Pioneering Sustainability

Thrust Areas for Pilot Projects:

• The guidelines emphasize three pivotal thrust areas for initiating pilot projects in the steel sector:
  • Incorporating Hydrogen in the Direct Reduced Ironmaking process.
  • Implementing Hydrogen in the Blast Furnace.
  • Gradual substitution of fossil fuels with Green Hydrogen.
• Additionally, the scheme welcomes innovative uses of hydrogen for carbon emission reduction in Iron and Steel Production.

Blending Approach:

• Steel plants are encouraged to adopt a gradual blending approach, starting with a modest percentage of green hydrogen in their processes.
• The blending proportion is anticipated to increase over time, aligning with advancements in technology and improving cost economics.

Incorporation in New Plants:

• Upcoming steel plants are expected to be designed with the capability to operate using green hydrogen, positioning them to participate in future global low-carbon steel markets.
• The guidelines extend support to greenfield projects aspiring to achieve 100% green steel production.

What is Green hydrogen?

• A colourless, odourless, tasteless, non-toxic and highly combustible gaseous substance, hydrogen is the lightest, simplest and most abundant member of the family of chemical elements in the universe.
• But a colour — green — prefixed to it makes hydrogen the “fuel of the future”.
• The ‘green’ depends on how the electricity is generated to obtain the hydrogen, which does not emit greenhouse gas when burned.
• Green hydrogen is produced through electrolysis using renewable sources of energy such as solar, wind or hydel power.
• Hydrogen can be ‘grey’ and ‘blue’ too.
  • Grey hydrogen is generated through fossil fuels such as coal and gas and currently accounts for 95% of the total production in South Asia.
  • Blue hydrogen, too, is produced using electricity generated by burning fossil fuels but with technologies to prevent the carbon released in the process from entering the atmosphere.

Green Hydrogen Importance

• Hydrogen is being used across the United States, Russia, China, France and Germany. Countries like Japan desire to become a hydrogen economy in future.
• Green hydrogen can in future be used for
  • Electricity and drinking water generation, energy storage, transportation etc. 
  • Green hydrogen can be used to provide water to the crew members in space stations.
  • Energy storage- Compressed hydrogen tanks can store the energy longer and are easier to handle than lithium-ion batteries as they are lighter.
  • Transport and mobility- Hydrogen can be used in heavy transport, aviation and maritime transport.

India’s Initiatives to Promote Green Hydrogen

National Green Hydrogen Mission:

• The launch of the National Green Hydrogen Mission aims to significantly boost green hydrogen production in India.
• The mission targets the annual production of 5 million metric tonnes of green hydrogen by 2030.
• This initiative is closely aligned with India’s plan to establish approximately 125 gigawatts of renewable energy capacity.
• The program provides financial incentives to support domestic production of electrolysers and green hydrogen.
• These incentives intend to accelerate the adoption of green hydrogen technology, foster technological advancements, and drive down production costs.

Green Hydrogen Consumption Obligations:

• The Ministry of New and Renewable Energy (MNRE) has proposed the introduction of green hydrogen consumption obligations.
• Similar to the renewable purchase obligations for electricity distribution companies, these obligations will apply to the fertilizer and petroleum refining sectors.
• These industries will be required to incorporate a certain percentage of green hydrogen in their overall hydrogen consumption.
• This measure aims to drive the adoption of green hydrogen across key sectors, further contributing to India’s transition to cleaner energy sources.

Challenges in Adopting Green Hydrogen in Steel Plants

Technological Transition:

• Shifting from traditional steelmaking processes to hydrogen-based methods demands substantial technological adaptation. Existing plants may require extensive modifications or redesigning, posing challenges in implementation.

Infrastructure Development:

• Establishing the necessary infrastructure for hydrogen production, storage, and transportation adds complexity and cost to steel plant operations. This includes the construction of production facilities, storage tanks, and distribution networks.

Capital Costs:

• The adoption of hydrogen-based processes may involve higher initial capital costs compared to conventional methods. Investments in new equipment, infrastructure, and technology, along with ongoing operational expenses, pose financial challenges for steel producers.

Supply Chain Reliability:

• Ensuring a reliable supply chain of hydrogen, including sourcing raw materials and maintaining consistent production levels, is crucial for uninterrupted steel plant operations. Dependence on external suppliers and potential disruptions present logistical challenges.

Carbon Capture and Storage (CCS):

• Despite the potential for carbon emissions reduction, capturing and storing CO2 emissions generated during hydrogen-based steel production remains challenging. Developing cost-effective CCS technologies compatible with steel plant operations is critical for achieving net-zero emissions targets.