The government has earmarked Rs 455 crore as Central Financial Assistance until the fiscal year 2029-30 for the incorporation of green hydrogen in the steel industry sector. On February 2, 2024, the Ministry of New and Renewable Energy issued scheme guidelines for the execution of pilot projects to utilize green hydrogen in the sector as part of the National Green Hydrogen Mission.

The scheme's objectives include facilitating the adoption of 100% hydrogen in the Direct Reduced Ironmaking process, integrating hydrogen into the Blast Furnace, gradually replacing fossil fuels with green hydrogen in the DRI process, and conducting pilots to enable decarbonization in iron and steel production. It aims to advance technologies and knowledge for utilizing green hydrogen in steelmaking, address existing gaps, support pilot projects for deploying green hydrogen and its derivatives, validate technical feasibility in iron and steel manufacturing, and evaluate the economic viability of its utilization.

 The scheme's funding will be drawn from the budget allocations for the National Green Hydrogen Mission. The Steel Ministry will nominate the implementing agency. These pilot projects are expected to identify operational challenges and gaps, providing valuable insights for future scaling and commercial deployment of green hydrogen in the iron and steel sector. The initiative anticipates the development of infrastructure, including refueling stations, storage, and distribution networks, fostering the establishment of a green hydrogen ecosystem in the steel industry. As the production cost of green hydrogen is anticipated to decrease, its usage in the steel industry is expected to rise.