India’s transition to low-carbon green steel is set to remain a gradual and long-term process as cost and technological constraints continue to hinder rapid decarbonisation, Indian rating agency ICRA said in a steel sector report on Wednesday, January 21.
According to ICRA, Indian steelmakers’ carbon emission intensity averages about 2.5 mt of CO2 per metric ton of steel and this is roughly 12 percent higher than the global average for the blast furnace-basic oxygen furnace (BF-BOF) route.
The recent introduction of a ‘Green Steel Taxonomy’ by the government, under the National Mission on Green Steel, marks a positive step, setting graded emission thresholds to define what qualifies as “green” steel, ICRA said. 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, the rating agency said in its report.
The planned capacity additions of about 80-85 million mt in India by 2030-31 are heavily skewed towards the coal-based BF-BOF route, the share of which will increase from about 45 percent currently to roughly 51 percent by 2030-31, reflecting a high carbon intensity in the medium term, ICRA stated.
Consequently, 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 about a 19 percent reduction in emission intensity by 2029-30 and would bring the sectoral average down to roughly 2.0 mt CO2 per mt by the end of this decade. A major part of this reduction is expected from renewable energy integration and process optimizations, ICRA said.
The report said that about 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 about 13 percent for BF-BOF-based mills and by up to 22 percent for DRI-based steelmaking units.
Other operational options 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 mt. However, scrap-based EAF capacity, which has a far lower carbon footprint, remains constrained by limited scrap availability in India.
