How will Indian steel mills tackle the challenge of low-carbon transition?

• Global regulatory push to hurt domestic mills
  
  
• Green steel demand may take shape by CY'30
  
  
• Lack of standards impacting transition
  
  
• Emerging carbon market key to steel industry decarbonisation
  
  

Emissions from the steel sector in India are high at 2.5 tco2/tcs (per tonne of crude steel) compared with a global average of around 1.9 tco2/tcs. India accounts for 4-5% of global CO2 emissions and the steel sector is responsible for around 12% of the country's total emissions.

Indian steel production will nearly double by the next decade and this presents a great challenge in terms of emissions reduction, observed consultant and expert Harsh Choudhry at an exclusive session as part of SteelMint's ENGAGE 5.0 recently. Choudhry is Founder and CEO of sentra.world, a technology platform that helps companies manage their ESG profiles.

Regulatory push

For the first time, a global level regulation specific to six industrial sectors, has kicked in in the form of the EU's Carbon Border Adjustment Mechanism (CBAM). Steel is central to this regulation, as out of the 750 CN codes identified as part of CBAM, 700 are related directly to steel.

As Indian steel exports to the EU are significant, this regulation is bound to have a major impact not only on trade, but the way Indian steel producers respond to it.

Green steel demand

There is also a commercial push for green steel. Several steel consortia are working towards green steel globally, and one of them is SteelZero through which demand-side companies can influence producer action for an early transition to low-carbon steel.

Several SteelZero members have operations in India and are committed to buying only net-zero steel by 2050.

These members, including major companies such as Volvo, SKF, Maersk, etc., have committed to a minimum of 50% of steel procurement by 2030 from producers with Science-based Targets (SBT) or equivalent, only those certified by ResponsibleSteel, or those offering lower CO2-embodied steel, said Choudhry.

What is low-carbon steel?

As per SteelZero, the definition of low-carbon steel is as follows:

• Crude steel produced from 100% scrap should have an emissions intensity of 0.2 tco2/tcs
  
  
• Crude steel produced from iron ore should have CO2 intensity of around 1.4 tco2/tcs
  
  

Green steel standard

There are many green steel standards, which, in a sense, imply that there are no definite standards. This is hindering the low-carbon transition of the steel industry in India where, incidentally, there are no standards, said Choudhry.

Besides emissions monitoring, demand and supply side solution developments, research, transition finance and skill development, the key task for the 13 taskforces set up by the Steel Ministry is to arrive at a consistent definition of low-carbon steel.

This will create clarity about the standards that steel producers have to abide by and help in channelising the government's effort toward low-carbon steel.

Emerging carbon market

The establishment of a standard by the government will necessarily hasten the implementation of the carbon trading scheme in India, which is expected to accelerate the transition towards low-emissions steelmaking.

With the PAT scheme as the precursor, the Indian carbon emissions trading scheme is expected to take a definite shape in the years to come.

With best available technologies (BATs), increased renewable energy usage, a national-level policy on natural gas for the DRI sector, thrust on domestic scrap generation and CCUS, it is expected that the transition in the Indian steel industry is not far away.

2nd India Steel and Metal Conference: Keeping above dynamics in mind, SteelMint, along with the Steel Users Federation of India, will be organizing the 2nd India Steel and Metal Conference: Supply Chain & Sourcing Strategies, over 10-11 January, 2024 in Mumbai. Several key sessions will explore the current challenges and enablers. Experts will also try to read future trends.

This is the only conference focusing on steel end-user industries and their issues. It will be followed by the glittering SUFI Steel Awards, 2023. Register fast.