Written by PPL Newsroom• October 5, 2026• 12:04 pm• Innovation

TERI and Transition Asia model green steel plant on Andhra Pradesh coast

The 2026 study puts a hydrogen-based plant’s base-case cost about $70 a tonne above blast furnace steel, with emissions roughly nine-tenths lower.

Transition Asia and The Energy and Resources Institute (TERI) have published a 2026 study on whether green steel made with hydrogen can work commercially in India. Titled “Is Green Steel Within Reach in India?”, it tests a large direct-reduction plant on the Andhra Pradesh coast. It looks at cost, emissions and policy support, and its base case suggests a modest price premium for a very large cut in emissions.

What the study modelled

According to the Transition Asia model repository behind the report, the team simulated a plant making 9.6 million tonnes of steel a year. It assumes the plant runs at 85 per cent of capacity and that the investment decision is taken in 2030.

The model compares three gas-based direct-reduction routes. These use fuels ranging from 100 per cent natural gas to 100 per cent green hydrogen, under the power and hydrogen supply options available in the state. In all, the report draws on 54 solved cases.

In the base case, the repository lists a levelised cost of $606 per tonne of crude steel and emissions of 0.29 tonnes of CO2 per tonne. Levelised cost spreads the plant’s build and running costs over its life into a single per-tonne figure. The comparison point is a conventional blast furnace plant at $536 per tonne and 2.6 tonnes of CO2 per tonne, taken from a 2026 study by the IECC.

That puts the green route roughly 13 per cent more expensive per tonne. Its emissions are about nine-tenths lower. All emission figures are “cradle-to-gate”, meaning they cover everything up to the factory gate.

The base case includes hydrogen support, namely the central SIGHT incentive and the state’s capital subsidy for electrolysers. The team also ran a no-subsidy case with that support removed. Carbon prices are not built into the model. Instead, the team calculated what India’s carbon credit trading scheme and the European Union’s border carbon charge would be worth to the plant.

Why the economics matter

India’s steel ministry has defined “green steel” as steel made with less than 2.2 tonnes of CO2 per tonne, according to a Reuters report. Its top “five-star” grade needs emissions below 1.6 tonnes. On the repository’s numbers, the modelled base case is far below both thresholds.

Cost remains the sticking point. Alok Sahay of the Indian Steel Association has said that hydrogen-based steelmaking is not yet cost-effective in India. He also pointed to the lack of affordable gas and a high-emission power grid. He put India’s steelmaking at 2.5 tonnes of CO2 per tonne of crude steel, against a global average of 1.9.

Timing adds urgency. The Institute for Energy Economics and Financial Analysis (IEEFA) notes that 92 per cent of India’s planned capacity expansion, from 180 to 300 million tonnes, is not yet built. Technology choices made now will shape emissions for decades.

What this means for India

The study is built around an Andhra Pradesh coastal site, so it speaks directly to a state with ambitions in green hydrogen. Its base case suggests that, with current hydrogen support, a premium of roughly $70 a tonne could buy a steep emissions cut. The no-subsidy case, which the model also tests, shows how much depends on policy. With most new capacity still unbuilt, such site-level studies give planners and lenders numbers to test before committing to long-lived plants.

What to watch

These are modelled results, not a plant under construction. The inputs rest on 2025 commodity prices projected forward to 2030, and the electrolyser cost comes from anonymised project data in Andhra Pradesh. The full report and the open model are available from Transition Asia for readers who want to test other assumptions.