India can cut steel emissions before new coal plants lock them in
India’s green steel journey is still nascent but recent developments and policies have indicated that this hard-to-abate sunrise industry is rising up to the net-zero challenge. However, balancing growing demand with climate goals remains a formidable challenge for now, with a lot riding on the availability of green hydrogen
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Context
India is the world's second-largest steel producer, with a carbon-intensive production process that accounts for 12% of the country's greenhouse gas emissions. The aims to reduce emissions intensity, and recent research suggests that redirecting investments from coal-based blast furnaces to electric arc furnaces could significantly lower emissions and align with India's net-zero target by 2070. The government has also launched a certification scheme defining 'green steel' based on emissions intensity.
UPSC Perspectives
Environmental
The steel industry is considered a hard-to-abate sector because its core production process relies on a chemical reaction that releases large amounts of carbon dioxide. Traditional steelmaking uses the Blast Furnace-Basic Oxygen Furnace (BF-BOF) method, where coking coal is used as a reducing agent to strip oxygen from iron ore. This process is inherently carbon-intensive. Decarbonisation requires shifting to alternative technologies, such as Direct Reduced Iron (DRI) paired with Electric Arc Furnaces (EAF). DRI uses natural gas or to reduce iron ore, while EAF uses electricity to melt scrap steel or DRI. A transition to and renewable electricity is crucial for achieving near-zero emissions. UPSC may ask about the technical challenges of decarbonising heavy industries and the role of alternative fuels like in achieving the targets.
Economic
India's rapid infrastructure development demands significant steel production, leading to a planned capacity expansion from current levels to 300 million tonnes by 2030-31. This creates a risk of carbon lock-in, where investments in long-lived, carbon-intensive infrastructure (like new or relined blast furnaces) commit the country to high emissions for decades. The transition to greener technologies requires substantial capital investment. The government's ₹5,000-crore scheme aims to support this transition. A key economic challenge for India is the limited domestic availability of steel scrap, making the DRI-EAF route more viable than pure scrap-based EAF. The cost competitiveness of compared to natural gas will dictate the pace of the transition. Questions could focus on balancing industrial growth with climate commitments and the economic implications of transitioning to low-carbon technologies.
Governance
Effective policy intervention is essential to drive the transition in the steel sector. The and the accompanying certification scheme are steps towards establishing a framework for decarbonisation. By defining 'green steel' based on an emissions intensity threshold (currently set at less than 2.2 tCO2e per tonne), the government aims to create market demand for lower-carbon products. However, the current standard is relatively lenient compared to the global average (1.85 tCO2e), highlighting the need for progressively stricter targets. Strategic policy decisions, such as discouraging investments in new BF-BOF plants and incentivising DRI-EAF technologies, are crucial to avoid future reliance on expensive and nascent carbon dioxide removal (CDR) technologies. UPSC could explore the effectiveness of regulatory frameworks, standard-setting, and financial incentives in promoting industrial decarbonisation.