The decarbonization of the Indian steel industry will take longer than expected as adoption of green hydrogen as a primary fuel in steelmaking will be feasible only by 2050, a research report by two institutes said on Thursday, September 21.
According to the report on steel decarbonization in India prepared by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research, the shift towards green steel will take longer because the cost of green hydrogen needs to come down, while a price penalty must be imposed on carbon emissions for Indian steelmakers to switch to hydrogen-based steelmaking.
Strict enforcement of renewable purchase obligations (RPOs) on the steel sector can also help in the greater use of clean energy that would clear the path for successful transition to net zero, the report said.
It is expected that the challenges towards the green transition of the Indian steel sector will allow coal to remain as the primary fuel for steelmaking for more than a decade and it will only be replaced in the latter part of the 2030-2050 period.
As per the assessment of JMK and IEEFA, the Indian steel sector accounts for about 12 percent of the country’s total carbon dioxide emissions, with an emission intensity of 2.55 mt of carbon dioxide per mt of crude steel, compared with the global average of 1.85 mt of carbon dioxide per mt of crude steel.
Moreover, the steel industry is responsible for around 240 mt of carbon emissions annually, which is expected to double at an exponential rate by 2030, considering the Indian government’s infrastructure development targets.
The report said that, to start the move towards green steel production in the country, it is important that a legal definition for green steel is provided by the government that would help guide the industry in making the right investments for decarbonization. It also needs to create a market and demand for green steel, since all current technologies will substantially increase costs. A penalty on carbon emissions will also help bridge the cost of green steel and traditionally produced steel, the report said.