Decarbonizing India's steel industry: A strategic roadmap

India's steel industry charts an ambitious course towards green production, balancing economic growth with climate goals.

In brief

• India's steel industry, responsible for 12% of the country's emissions, must transition from coal-based production to green steel technologies.
• Key decarbonization pathways include modification of technology route (BF to DRI/EAF),  renewable-energy-transition, alternative fuels like natural gas / green hydrogen / bio mass and finally effective disposal through carbon Capture Utilization and Storage (CCUS).
• Government policies, financial facilitation/availability, and industry collaboration are essential for achievement of India's steel industry sustainability ambition, to achieve net-zero emissions by 2070.

The steel industry plays a crucial role in India's development, contributing to its rapid economic growth. However, as a major source of greenhouse gas emissions, the sector must undergo significant changes to meet the country's long-term decarbonization goals. The recently published Roadmap and Challenges for Iron Ore, DRI, Pelletisation, and Induction Furnaces/EAF in India Towards Decarbonization highlights the necessary steps and technologies needed for the steel sector eco-innovation India.

Current state of India's steel industry

India is the fourth-largest global emitter of greenhouse gases, with its steel industry responsible for 12% of the country's emissions. As steel production expands, largely through the carbon-intensive Blast Furnace-Basic Oxygen Furnace (BF-BOF) route, emissions are expected to increase until 2050. India is unique in its reliance on coal-based Direct Reduced Iron (DRI) processes due to the availability of domestic coal, making India's steel decarbonization efforts all the more challenging.

To meet rising demand, the government has set an ambitious goal to increase steel production capacity to 300 million tons by 2030. This growth, if left unchecked, will contribute further to emissions unless significant investments are made in green steel production India and energy sources.

Challenges in decarbonizing steel production

The report identifies several hurdles in transitioning to green steel production:

• High cost of green hydrogen: Green hydrogen, essential for decarbonizing steel production, remains expensive at $4–$7 per kilogram, compared to $1.8 for grey hydrogen.
• Limited scrap availability: India's scrap market is underdeveloped, complicating the adoption of Electric Arc Furnaces (EAF), which rely on scrap for lower emissions.
• Demand for green steel: India’s price sensitive market unwilling to pay the premium associated with green steel, without specific legislative support
• Inadequate carbon capture technology: While Carbon Capture Utilization and Storage (CCUS) can mitigate emissions, the technology is costly, energy-intensive, and lacks storage infrastructure.

Despite these challenges, the report underscores that collaborative efforts between the government and industry players can help India achieve net-zero emissions by 2070.

Decarbonization pathways for India

The transition to green steel will require a multi-faceted approach. Key decarbonization technologies include:

• Electric Arc Furnaces (EAF): Shifting from BF-BOF to EAF powered by renewable energy can reduce emissions significantly, with further reductions possible through the use of scrap.
• Alternate Energy and Fuels: The industry could explore transitioning to green energy and exploring alternate fuels like Biomass for BF.
• Green Hydrogen DRI: Replacing coal with natural gas and subsequently green hydrogen in the DRI process could reduce emissions by up to 97%. However, the high cost and infrastructure demands of green hydrogen limit its immediate adoption.
• Carbon Capture: While not a permanent solution, CCUS can serve as a transitional technology to reduce emissions from existing BF-BOF operations.
• Other new technologies: Several new technologies like Electrowinning, Electric Smelting and Electrolysis are also evolving slowly, and could become viable in future.

Recommendations for accelerating decarbonization

The report outlines several key strategies to accelerate the steel industry transformation in India:

• Promote green hydrogen adoption: Government policies should focus on reducing the cost of green hydrogen through domestic manufacturing and financial incentives.
• Enhance scrap collection and utilization: Expanding the scrappage policy and improving the scrap supply chain will be critical for the widespread adoption of EAF.
• Incentivize green steel: Introducing carbon border tariffs, mandating the use of renewable energy, and providing green financing options such as green bonds can help steelmakers transition to greener processes.