Achieving green steel: How India can bridge the gaps to decarbonise the sector

The steel industry is very important for the Indian economy and has been the backbone of the country’s industrial development. 

At present, the iron and steel sectors are highly energy intensive and big on emissions. As decarbonisation of the power and transport sector moves forward in leaps and bounds, the iron and steel, cement and chemical industries have started to focus their attention on greening the sector.

Transitions in the Indian steel sector

At present, the country’s iron and steel sector is financially weak. More than 80 per cent of the country’s reserves are in the states of Odisha, Jharkhand, West Bengal, Chhattisgarh and the northern regions of Andhra Pradesh. 

Western states Gujarat, Maharashtra and Karnataka have made good use of the available non-conventional sources of energy in the region. This can be further developed once the greening of the grid happens. 

Some states where steel is transported from eastern India have large installed renewable energy capacities. Some of these states may also have adundant mineral resources that can be used to manufacture steel domestically, and this may reduce demand from steel from other states. 

Thus, it is important to make accurate projection of steel demand in these states to ensure only necessary volume is produced to lessen fossil-fuel consumption.

There is a necessity to find out the future steel-making needs when it comes to transporting iron across the regions which are abundant in terms of mineral reserves as well as renewable sources of energy. A clean steel sector in eastern India can become an essential part of the green energy transition happening across the country.

The expense head for steel production in the country is dependent on a number of variables, as explained in the following table.

Expense heads for steel production in India

Source: Niti Aayog, 2016

Decarbonising the sector

In order to decarbonise the iron and steel sector, the primary emphasis through technological interventions would be on substituting the primary production processes with cleaner alternatives. The three main ways to produce steel from iron through clean technologies are :

1. Carbon capture, utilisation and storage (CCUS)
2. Replacing conventional sources of energy with low-carbon hydrogen
3. Direct electrification through electrolysis of iron ore

These technologies are distinct from each other. Their capacity to reduce emissions and linking with the country’s existing infrastructure depend on the scenario in the country.

As countries ramp up their emission reduction policies, it is necessary to have an early intervention for the steel sector to remain competitive. Some of the interventions to be explored are:

• Increasing energy efficiency through the adoption of technologies that are cost-effective should be allowed especially. There are many old plants that need to be refurbished. Such plants can improve their energy efficiency with the application of largely used efficiency measures. Funding for energy efficiency measures for electricity-based manufacturing has bright prospects for further investment. Electricity-based manufacturing methods would continue to become green as the grid becomes greener.
• Increasing the use of scrap helps in lowering the energy used for making steel since it can be added to electric arc furnace and blast furnace, with basic oxygen furnace methods. Constructing a suitable infrastructure for recycling and the Steel Scrap Recycling Policy by the Union Ministry of Steel extends the first step in the direction.  This helps in scrap utilisation in these methods that reduce emissions.
• Creating associations with corporates using steel could send demand signs to producers to manufacture green steel. To drive demand for green steel, the government and public sector should commit to the purchase of environmentally sustainable green steel.
• Public and Private sectors would have to generate green standards and similar types of labels for the market growth of green steel. The Confederation of Indian Industries is working in association with TATA Steel to register its GreenPro framework for steel rebars. The Ministry of Steel could work with the Bureau of Indian Standards to generate green standards for products. For instance, the Union Ministry of Steel initiated the Quality Control Order in March 2020 that does not allow the import, sale and circulation of low-standard steel and its products. This will ensure quality steel is available for construction, and other sectors. A similar procedure could be used with the green steel standard to decarbonise the sector.
• Domestic carbon-trading market is a necessity when it comes to switching to low-carbon technologies. India has gained success through its Perform Achieve Trade scheme, according to which energy efficiency certificates are traded between the designated consumers. These include the iron and steel sector. Since the need to reduce emissions is gaining prominence, one way to achieve it is by amending the policy to estimate and check the carbon emissions instead of energy consumed.

With the industry rapidly decarbonising, it is important to remove old and polluting plant facilities, which have reached the end of their life. Some of the most polluting steel facilities are currently being operated in India and there is a long road ahead to decarbonise the sector.