India’s Green Steel Demand to Reach 179 Million Tons by 2050: Report

India’s demand for green steel is projected to rise sharply to approximately 179 million tons by FY2050, driven by growth in the automotive, infrastructure, and construction sectors, according to a new report from EY Parthenon, developed in partnership with WWF-India and the CII-Green Business Centre, with support from the India Green Steel Coalition (IGSC).

The report, “Unlocking Green Steel Demand: An Assessment of India’s Automotive, Infrastructure and Construction Sectors”, comes as India targets 500 million tons of annual steel capacity by 2047 in alignment with its climate goals.

“Transitioning to green steel is both a challenge and a major opportunity for India’s industrial sector,” said Kapil Bansal, Partner – Energy Transition and Decarbonization, EY Parthenon. “With rising carbon prices and falling green hydrogen costs, green steel is evolving from a sustainability goal to a business necessity.”

Rapid Demand Growth Forecast

The report defines green steel as having emissions intensity below 0.5 tons of CO₂ per ton of crude steel. Demand, currently negligible, is expected to reach 4.49 million tons by FY2030—led by construction (2.52 MT), infrastructure (1.5 MT), and automobiles (0.48 MT). By FY2040, demand could reach 73.44 million tons, ultimately rising to 179 million tons by FY2050.

India’s current steel consumption stands at 136 million metric tons, with the construction and infrastructure sectors accounting for 78% of finished steel demand. This is projected to grow to 390 million tons by 2050 amid rapid urbanization.

Carbon Pricing to Reshape Steel Economics

The report highlights the impact of carbon pricing on steel production. Prices for traditional BF-BOF steel could increase 81% by 2050—from USD 660/ton today to USD 1,193/ton—due to rising carbon taxes. Meanwhile, the green steel premium, currently around USD 210/ton, is expected to decline significantly as technologies mature and production scales up.

Currently, green steel use leads to moderate cost increases: 4.1% in automotive, 3.7% in construction, and 5.2% in infrastructure. These are projected to fall below 1% by 2035–2040.

CBAM: A Challenge for Indian Exporters

The European Union’s Carbon Border Adjustment Mechanism (CBAM) poses a significant risk to Indian steel exports. India’s current steel emission intensity is 2.5 tons of CO₂ per ton, nearly double the EU’s benchmark of 1.28 tons. Without decarbonization, Indian exporters could face CBAM-related taxes worth INR 19,277 crore by 2030, the report warns.

Roadmap for Stakeholders

Policy Recommendations:

• Introduce carbon pricing mechanisms (US$90–100/ton by 2040)

• Provide incentives for green steel technologies

• Align regulatory mandates with global emissions standards

Industry Actions:

• Cut emission intensity to 1.21 tons of CO₂/ton by 2030

• Scale hydrogen-based DRI and low-emission steelmaking

• Reduce green steel costs by 30% through R&D by 2040

End-User Sector Strategy:

• Begin green steel procurement well before net-zero deadlines

• Accept current cost increases for long-term gains

• Collaborate with suppliers to ensure steady green steel availability.