KOLKATA: As World Environment Day approaches on June 5, this year hosted by Azerbaijan under the theme “Inspired by Nature. For Climate. For Our Future”, the conversation globally tends to drift toward the visible and the vivid: forests, oceans, melting glaciers. Steel rarely makes the cut. It is unglamorous, industrial, and largely invisible to most people, even as it holds up the buildings they live in and the roads they drive on. Yet real climate action means rethinking the systems that power economies, and few systems are more carbon-entrenched or more consequential to India’s development story than steelmaking.India has long worn its status as the world’s second-largest steel producer as a badge of pride. But that badge now carries a carbon price tag, and the bill is coming due faster than the industry once imagined.Three forces have collided this spring to make green steel an urgent industrial priority: India’s freshly updated climate targets under the Paris Agreement, a government-funded hydrogen push that has now cleared real money for real pilots, and a European carbon border levy that began biting Indian steel exporters at the start of this year.Why steel, and why is it hard?Steel is everywhere: in bridges, cars, washing machines, and the reinforcing bars holding up India’s infrastructure boom. It is also globally one of the dirtiest industries on the planet. Making steel the conventional way means burning coking coal in blast furnaces to strip oxygen from iron ore, a process that belches CO₂ at every step.The scale of India’s ambition makes the challenge acute. Finished steel consumption touched 152 million tonnes in 2025, growing at 8.5%, fuelled almost entirely by the government’s infrastructure push (roads, railways, metro systems, affordable housing). The National Steel Policy targets 300 MTPA of capacity by 2030 and per capita consumption of 160 kg by 2031, up from 100 kg today. To get there, the steel industry is expected to attract nearly ₹9 lakh crore in investment this decade, with every major player actively expanding simultaneously. India aims to produce 500 million tonnes by 2047. The question that hangs over all of it: how much of this expansion will be green?India’s problem is structural. Unlike developed economies, India has limited scrap availability, expensive natural gas, and low-grade coal and iron ore, all of which force steelmakers to rely on coal-based blast furnaces. The result: India’s steel sector emits 2.54 tonnes of CO₂ per tonne of crude steel, against a global average of 1.91, and accounts for 10–12% of the country’s total emissions. Former steel secretary Sanjay Kumar Singh, now director at Jindal Steel & Power, recently told ANI: “Only 25 per cent of the steel can be made from scrap. So we have to rely on iron ore. And iron ore is invariably produced in a blast furnace. So that’s a challenge in green steel.”A growing gap between ambition and actionIn March 2026, India approved updated Nationally Determined Contributions (NDCs), committing to cut emissions intensity of GDP by 47% from 2005 levels by 2035. On renewables, India is ahead of schedule, hitting 52.57% non-fossil power capacity as of February 2026, five years early. But the steel sector (one of only two major industries still growing its emissions in 2025) remains an outlier in an otherwise improving picture.An April 2026 report by the Institute for Energy Economics and Financial Analysis (IEEFA), sharpens the concern beyond climate alone. India’s steel sector depends on imports for roughly 90% of its metallurgical (met) coal needs, and 64% of the new capacity currently under development is coal-based blast furnace technology. “India is exposing itself to significant energy security risks by continuing to build blast furnaces that rely on imported met coal. There is a growing risk that coking coal supply from places like Australia (by far the biggest exporter) won't be enough to meet India's demand,” said Simon Nicholas, lead analyst (global steel) IEEFA.Reaching the 300 million tonnes per annum (MTPA) target could require an additional 140 million tonnes of met coal annually, nearly doubling current import levels. The report states that India’s met coal import bill is projected to rise from 94 million tonnes today to 149 million tonnes by 2035. Decarbonising steel, the report argues, is as much an energy security imperative as a climate one.Saumya Nautiyal, energy finance analyst (steel sector), South Asia, IEEFA said, “If the bulk of new steel capacity continues to be built through coal-based blast furnaces, India risks locking itself into higher import dependence and greater exposure to volatile global coal prices. The most urgent policy interventions are to scale up India’s scrap steel ecosystem, accelerate electric arc furnace capacity, support early-stage green hydrogen-based steelmaking, and create strong domestic demand signals through green steel procurement and standards.”National Hydrogen Mission and the EU LeverIndia's first concrete bets on green steel arrived almost simultaneously from government and industry. In March 2026, the government cleared three hydrogen-steel pilot projects under the National Green Hydrogen Mission, committing Rs 347 crore to test 100% green hydrogen in direct reduced iron (DRI) production (a process that replaces coal with gas or hydrogen to make iron) and to trial hydrogen injection in existing blast furnaces. Commissioning is expected within three years.Meanwhile, in the private sector, JSW Energy has commissioned India's largest commercial green hydrogen plant at Vijayanagar in Karnataka, now supplying JSW Steel's DRI unit under a seven-year offtake agreement. JSW Steel has separately carved out its Salav facility in Maharashtra as JSW Green Steel Limited, with plans to build a 4 MTPA plant on the DRI route, targeted at export markets. The motivation behind the export focus is not hard to find. From January 2026, every Indian steel shipment entering the EU incurs a carbon cost under the Carbon Border Adjustment Mechanism (CBAM), with exporters potentially absorbing €200–225 per tonne. Steel exports to the EU fell 31% through 2025, and tighter EU safeguard quotas from mid-2026 are expected to accelerate that decline further.A May 2026 policy brief by the India Energy and Climate Center (IECC) at UC Berkeley's Goldman School of Public Policy finds that green steel produced through hydrogen-based direct reduction reaches cost parity with new blast furnace steel as early as 2030, and is already cheaper for EU exports once CBAM costs are included. India's planned coal-based expansion, the brief warns, would lock the country into over $1.2 trillion in coking coal imports over the life of those assets.“Steel made with green hydrogen could become cheaper than new conventional steel by 2030. India's low-cost clean power and green hydrogen, produced at about half the cost in Europe, give it an advantage few steel-producing nations can match. But that advantage is time-sensitive, and capturing it will require the industry and government to work together to firm up demand, as India did for renewables and green ammonia. The route India chooses in the next two years sets its industrial competitiveness, energy security, and low-emission growth for decades,” said Neelima Jain, Director, Industrial & Trade Policy, IECC, UC BerkeleyThe Government as ‘First Customer’One underleveraged tool in India’s green steel push is the government’s own purchasing power. Public procurement in India accounts for approximately ₹45–50 lakh crore annually (close to a fifth of the GDP), and government-linked infrastructure projects consumed around 31.6 million tonnes of steel in 2024, generating approximately 70 million tonnes of CO₂.A February 2026 study by CII–Green Business Centre and Climate Catalyst finds that mandating just 26% of certified green steel in government projects above ₹1 crore (from 2028 onwards) could unlock up to 16 million tonnes per annum of demand by 2030 and avoid 20.9 million tonnes of CO₂ emissions. A 37% mandate could push that to 24 MTPA. The cost impact on infrastructure projects: 0.2–1.2%. Of the 28 major steel producers surveyed, 93% said they are ready to supply certified green steel if the mandate is implemented.“GPP is the missing demand signal that can immediately cut emissions, unlock large-scale investment and move the industry into a 16–24 MTPA green-steel market by 2030. With minimal cost impact and massive climate returns, it is the most realistic tool India has to drive real transition this decade,” said Sakshi Balani, director (India), Climate Catalyst.The challenge aheadFinancial support for the steel transition is taking shape, though the picture is still evolving. Budget 2026-27 has committed ₹20,000 crore over five years for Carbon Capture, Utilisation and Storage (CCUS) technologies across industries, including steel. India’s Carbon Credit Trading Scheme is also set to begin in October this year, with emissions intensity targets across nine sectors. Whether carbon pricing at realistic levels will be enough to change investment decisions at scale remains an open question.India's target is 500 million tonnes of steel by 2047, which is more than three times what it produces today. The hydrogen pilots are funded, the first commercial green hydrogen supply to a steel plant is running, and a detailed procurement roadmap has been proposed by industry. What is missing is not ambition, or readiness, or even money. It is the policy decision that makes the rest follow."India has already taken the hard first step, becoming the first country in the world to define green steel through a national taxonomy. Two things now need to follow: a mandate that creates the market, and finance that makes the transition affordable. A green public procurement mandate tells producers the demand is real and gives them the confidence to invest in low-carbon steelmaking. And the finance has to be structured to make those first projects bankable, with blended and transition finance that de-risks early movers and brings down the cost of capital," said Nandan Sharalaya, programme lead (steel India), Climate Catalyst.