The CSIRO and Indian Institute of Science revealed the findings on Tuesday from tests in which rice husk pellets were substituted for the coal that's typically used to produce steel.
Researchers said the trial, conducted at a commercial plant in India, proved agricultural waste could play a major role in reducing pollution from steel production, which contributes eight per cent of global emissions.
The research comes one month after the first applications to the federal government's $1 billion Green Iron Investment Fund closed, and days after reports emerged that India was considering a green steel mandate.
The study, held in partnership with Bangalore-based RESCONS Solutions and held at India's Jindal Steel facility, tested whether locally sourced agricultural waste could be used to produce steel.
Rice husk pellets were substituted for five per cent and later 10 per cent of the coal typically used to create a synthetic gas for steel production, and proved just as efficient.
The use of rice cut emissions from the process in half, the research found, and had the potential to reduce greenhouse gases from the Indian steel industry by 357 million tonnes per year.
The findings proved biomass could be used to cut greenhouse gas emissions from steel production in other nations, CSIRO senior environmental scientist Warren Flentje said.
"This trial is a world-first demonstration of how agricultural waste can be harnessed to decarbonise steelmaking at scale," he said.
"This is a major step forward for sustainable steel production in India and globally."
India's steel industry is forecast to produce 300 million tonnes of steel per year by 2030, but it generates more pollution than the global average at 2.55 tonnes of carbon emissions per tonne of steel compared to 1.8 tonnes.
Using agricultural waste to reduce carbon emissions could prove particularly useful where production facilities were located near farms, CSIRO green metals production research group leader Keith Vining said.
"Biomass can be a viable alternative to coal, especially in regional areas where surplus agri-waste and coal (direct reduced iron) facilitates co-exist," he said.
"The next phase will focus on increasing biomass replacement rates and assessing impacts on the direct reduction process."
Green iron production is also a major focus in Australia with the federal government launching a $1 billion investment fund in February 2025, including $500 million to support early projects.
Fortescue's Christmas Creek project in Western Australia is expected to be among the first projects to produce green iron locally, although the Whyalla Steelworks in South Australia is undergoing a transformation to produce the metal using hydrogen.
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