India navigates green steel transition amidst European scrutiny

  • Industry News
  • Dec 08,23
This move is anticipated to impact Indian steel exporters, particularly those reliant on environmentally damaging coking coal for furnace operation.
India navigates green steel transition amidst European scrutiny

Europe has initiated surveillance of its steel imports with the aim of discouraging products stemming from processes with high carbon emissions. This move is anticipated to impact Indian steel exporters, particularly those reliant on environmentally damaging coking coal for furnace operation. While the immediate repercussions are not apparent, Europe's Carbon Border Adjustment Mechanism (CBAM) has spurred India's shift towards Green Steel.

The European Union (EU) refers to its CBAM as a tool to fairly price emissions associated with the production of carbon-intensive goods entering its territory, encouraging cleaner industrial practices globally. CBAM commenced its transitional phase on October 1, 2023, with the initial reporting period concluding on January 31, 2024. Essentially, CBAM enables the imposition of trade barriers against carbon steel, produced using coal, while promoting greener alternatives.

In India, the steel sector contributes approximately 12% of the country's total carbon dioxide (CO2) emissions, with an estimated 2.6 tons of carbon emissions per ton of steel produced, surpassing the global average of 1.85 tons per ton of steel output. Concerningly, Europe may leverage these emission statistics to impose higher duties on Indian steel products.

India's steel exports, valued at Rs 51,334.03 crore from April to September 2023, experienced a decline from Rs 61,249.92 crore during the same period in the previous fiscal year. Notably, Italy, Belgium, Spain, and the United Kingdom are among the top 10 export destinations for Indian steel, accounting for Rs 14,090.92 crore during the first half of the current fiscal year. To address this challenge, the Steel Ministry has formed committees to devise solutions, including defining Green Steel from an Indian perspective.

India is actively working to shape the narrative around Green steel, posing critical questions such as whether steel produced solely with Hydrogen as a feedstock qualifies as Green. Furthermore, considerations include using green energy, such as solar, to power electrolysers and determining the scope of carbon emissions during the transport of iron ore or finished products in the categorisation of steel as green.

The Steel Ministry has committed to achieving a Net-Zero target by 2070, aligning with the country's broader goals. Short-term strategies (till fiscal 2030) focus on reducing carbon emissions through energy and resource efficiency and promoting renewable energy. Medium-term efforts (2030-2047) concentrate on Green Hydrogen and Carbon Capture, Utilisation, and Storage, while the long-term (2047-2070) envisions disruptive technological innovations.

In support of these objectives, approximately 30% of the pilot project budget under the National Green Hydrogen Mission (NGHM) has been allocated to steel making, with a total outlay of Rs 19,744 crore by 2030.

Indian corporations are adopting diverse strategies, with some favouring Direct-reduced iron (DRI), also known as sponge iron, for its lower emissions. Others are turning to Electric Arc Furnace for steel recycling and claiming higher carbon credits. Industry-wide, there is a collective call for government-backed incentives to facilitate the transition, alongside assurances that the government will procure any Green steel produced by the private sector.

Source: Indiatimes

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