India's secondary steel sector, which accounts for around 47 percent of the country's steel production and emits approximately 50 million mt of carbon dioxide annually, will play a crucial role in India's green steel transition, the US-based Institute for Energy Economics and Financial Analysis (IEEFA) stated in a report released on Friday, August 21.
Previous programs have demonstrated that energy efficiency technologies can generate significant savings. However, their broader adoption has been constrained by shortcomings in project preparation, financing, technical assistance and institutional capacity.
According to the IEEFA's analysis, micro, small and medium-sized enterprises (MSMEs) often prioritize working capital and capacity expansion over investments in energy efficiency. Adoption rates improve when energy efficiency measures are directly linked to productivity and profitability.
Limited access to financing, small project sizes, weak credit profiles and complex subsidy procedures have also hindered investment. The IEEFA recommended targeted measures such as project preparation assistance, project aggregation, risk-sharing mechanisms, longer loan tenures and technology performance guarantees instead of relying on larger subsidies.
Awareness and training programs alone have failed to generate sufficient investment-ready projects, as MSMEs also require support with technology selection, the preparation of bankable proposals and project implementation. Previous programs have additionally struggled to maintain networks of auditors, vendors and consultants after their funding ended.
International models could provide potential solutions, including China's risk-sharing and bank advisory approach and Latin America's Energy Savings Insurance model, which combines financing with technical validation, standardized contracts and insurance guarantees, the IEEFA stated.
