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India's Green Steel Transition: A Gradual Journey Amid Cost Hurdles

India's shift to low-carbon green steel will be a gradual, long-term process, hindered by cost and technological barriers. The nation's steelmakers currently have a carbon emission intensity roughly 12% higher than the global average. While the recent Green Steel Taxonomy is a positive step, most producers remain above even its highest emission threshold. Near-term decarbonisation will rely on efficiency gains and renewable energy, aiming for a 19% reduction in emission intensity by 2029-30.

Key Points: India's Green Steel Shift a Long-Term Process: ICRA Report

  • Transition is long-term due to cost/tech constraints
  • Emission intensity 12% above global average
  • Green Steel Taxonomy introduced in Dec 2024
  • 19% emission cut expected by 2029-30
  • 9 GW captive renewable capacity announced
2 min read

India's transition to low-carbon green steel a gradual, long-term process: Report

ICRA report says India's green steel transition is gradual due to cost & tech constraints. Emission intensity to fall 19% by 2030 via renewables.

"most Indian primary producers are currently well above even the upper end of this green range - ICRA Report"

New Delhi, Jan 20

India's transition to low-carbon green steel is to remain a gradual, long-term process as cost and technological constraints continue to hinder rapid decarbonisation, a report showed on Tuesday.

Over the long term beyond 2030, green steel demand in India is projected to accelerate and will be driven by tightening ESG compliance norms, large end-user industries (automotive, infrastructure, capital goods, etc) striving to decarbonise their supply chains, and policy measures.

Indian steelmakers' carbon emission intensity averages about 2.5 tonnes of carbon di-oxide per tonne of steel, roughly 12 per cent higher than the global average for the blast furnace-basic oxygen furnace (BF-BOF) route, according to rating agency ICRA.

Recent introduction of a Green Steel Taxonomy by the government in December 2024 (under the National Mission on Green Steel) marks a positive step, setting graded emission thresholds to define what qualifies as "green" steel.

However, most Indian primary producers are currently well above even the upper end of this green range, underscoring the significant decarbonisation gap, which needs to be bridged, said the report.

The domestic steel industry's near-term decarbonisation will mainly rely on operational efficiency gains and higher renewable energy adoption, which is expected to result in 19 per cent reduction in emission intensity by 2029-30 and would bring the sector average down to roughly 2.0 tCO₂ per tonne by the end of this decade, explained Girishkumar Kadam, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA.

A major part of this reduction is expected from renewable energy integration and process optimisations, he added.

The report highlights that 9 gigawatts (GW) of captive renewable power capacity has already been announced by domestic steel mills to replace fossil fuel-based electricity in their operations.

Transitioning to green power alone is expected to cut emissions by 13 per cent for BF-BOF based mills and by up to 22 per cent for DRI-based steelmaking units.

Other operational levers - such as higher scrap usage in furnaces, energy efficiency measures like waste-heat recovery, and iron ore beneficiation - are expected to further lower CO₂ per tonne, said the report.

- IANS

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Reader Comments

P
Priya S
The cost factor is a real concern. Green steel will be more expensive initially. Who will bear this cost? The automotive and infrastructure sectors will pass it on to consumers. The government needs a plan to subsidise this transition to keep our products competitive globally.
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Rohit P
Our emission intensity is 12% higher than global average? That's a wake-up call. We talk about 'Make in India' for the world, but if we don't decarbonise, exports will suffer due to carbon taxes like the EU's CBAM. Speed is of the essence.
S
Sarah B
As someone working in sustainable finance, the Green Steel Taxonomy is a positive and necessary move. It gives investors clarity. The 19% reduction target by 2030 seems achievable with operational tweaks, but true green steel requires breakthrough tech. Hope R&D gets a boost.
K
Karthik V
Good to see a realistic report. A gradual transition is the only practical way. We can't shut down plants overnight. Focus on scrap usage and waste-heat recovery makes sense—it's cost-effective and reduces immediate emissions. Let's walk before we run.
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Meera T
While the intent is good, I respectfully feel the targets lack ambition. "Gradual" can become an excuse for delay. Our cities are choking. We need aggressive policy pushes and stricter deadlines, not just reliance on "efficiency gains." The gap highlighted is significant.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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