India's Steel Sector and Decarbonisation
The steel industry is pivotal to India's economic growth, significantly contributing to infrastructure and industrial development. The sector currently produces approximately 125 million tonnes of steel annually, which must more than triple to over 400 million tonnes by mid-century to meet the country's growth potential.
Challenges and Opportunities
- The steel sector is responsible for about 12% of India's carbon emissions, mainly due to its reliance on coal.
- The dual challenge for India involves continuing development while adhering to long-term climate goals.
- Global efforts in decarbonising steel include China's increased scrap-based steel production and the EU's Carbon Border Adjustment Mechanism, pressuring exporters to adopt cleaner production methods.
Government Policies and Roadmaps
- The Indian government released the Greening Steel Roadmap and Green Steel Taxonomy, setting a foundation for sectoral decarbonisation.
- The National Green Hydrogen Mission and the Carbon Credit Trading Scheme (CCTS) are pivotal to this transition.
Barriers to Green Steel Adoption
- High cost and limited supply of green hydrogen.
- Insufficient renewable energy for industrial use.
- Limited availability of scrap material in India.
- Need for natural gas as a transition fuel, which should be prioritized by the government.
- Lack of long-term, low-cost funding for green steel projects.
- Workforce upskilling and technological support are necessary.
Recommendations for Policy and Investment
- The government should set clear carbon emission targets and implement a carbon pricing regime similar to Europe's, where technologies became viable with a carbon price of $90-$100 per tonne of CO2.
- Promotion of green steel through public procurement policies and proper certification.
- Development of infrastructure hubs for green steel to share costs amongst stakeholders.
- Small and medium enterprises might require additional fiscal support.
Green steel production is essential for India's climate goals and could position the country as a global leader in sustainable industrialisation. By aligning corporate actions with supportive policies, India can successfully decarbonise its steel industry, ensuring economic competitiveness and setting global standards.
