Discover How India is Revolutionizing the Steel Industry by Going Green

India's steel scene is truly flourishing! Contributing to nearly 2% of India's GDP, this industry is pivotal for India's advancement. Guess what? In the 2023 financial year, there was a whopping 7.6% growth in finished steel production, reaching 122.3 million tonnes.

But here's the thing, the steel sector emits around 12% of India's total CO2 emissions. That's about 2.55 tonnes of CO2 for every tonne of crude steel. Globally, the average is just 1.85 tonnes. As India pushes for more infrastructural growth, the CO2 emissions from the steel industry are predicted to soar. But don't worry, there's a plan!

Multiple state-of-the-art technologies can bring down these emissions. Ever heard of green hydrogen? It's one of the cleanest ways to produce steel. But it's a tad pricey right now. For India's steel magnates to really adopt this change, green hydrogen needs to be more affordable and there should be financial consequences for carbon emissions.

The Indian government isn't sitting idle either. They've rolled out the Steel Scrap Recycling Policy and the Perform, Achieve and Trade scheme, among others. But the crown jewel? The National Green Hydrogen Mission. With a hefty 30% of its pilot project budget dedicated to green hydrogen in steel production, there's real momentum here. Just this July, two key initiatives were launched to make green hydrogen more accessible and affordable.

By 2030, we foresee a major shift. Coal-based steel production will likely reduce, making way for cleaner alternatives. From 2030 to 2050, the demand for green hydrogen will skyrocket, pushing out the old coal-based methods. And by 2070? India could be all about green steel, thanks to falling hydrogen costs and a competitive market.

To boost this green revolution, financial instruments tailored for the steel sector, like sustainability-linked bonds and blended finance mechanisms, will play a crucial role.

Of course, every innovation has its hurdles. The steel sector has technical and commercial challenges to overcome. But with clever policies and strategies, India can surmount these obstacles. For instance, what really is "green steel"? A clear definition is crucial. By categorizing steel that's 100% fossil-fuel-free as "green", and those that reduce emissions as "low-carbon", we can set a clear path for the industry.

We've also got to create demand for green steel. How about the government requires a certain amount of green steel in their purchases? Maybe even offer Green Steel Certificates for trading in the carbon market? And hey, let's not forget incentives! If traditional steel production is more expensive due to penalties, green steel becomes even more appealing.

Lastly, continuous investments in green hydrogen production can drive down its cost. So, introducing a green hydrogen purchase obligation could work wonders. Stick to renewable purchase obligations, and we'll see cleaner energy across the board in steel production.

With the right strategies, we're optimistic that by 2070, India's steel sector will be shining brightly and greenly!

Source : IEEFA