Mains: GS III – Economic Development
Why in News?
India is accelerating steel decarbonisation through the National Mission on Green Steel, financial support and green-hydrogen pilots to curb future coal-based emissions amid rising steel demand.
What is the Current Status of India’s Steel Production?
- Steel share – It accounts for nearly 12% of India’s total greenhouse gas emissions.
- India produced around 160 million tonnes (MT) of steel in FY 2025–26, making it the world's second-largest producer.
- India aims to increase crude steel capacity to 300 MT by 2030–31, 400 MT by 2035–36.
- Achieving Net Zero by 2070 requires substantial decarbonisation of steelmaking.
- India’s steel emission intensity is around 2.55–2.65 tCO₂e per tonne of crude steel, considerably above the global average of about 1.85 tCO₂e.
|
Steel as Hard-to-Abate Sector
|
- Conventional BF-BOF Route – The Blast Furnace–Basic Oxygen Furnace (BF-BOF) route:
- Uses coking coal to generate high temperatures and remove oxygen from iron ore.
- Produces large quantities of CO₂.
- Remains the dominant global steelmaking route.
- In India
- 43% of crude steel → BF-BOF
- 22% → Electric Arc Furnace (EAF)
- 35% → Electric Induction Furnace
- The share of BF-BOF capacity could rise to 56% by 2030, creating a risk of long-term carbon lock-in.
|
A hard-to-abate sector means an industry where cutting greenhouse gas emissions to zero is very difficult, expensive, or slow.
What are the available Cleaner Alternatives?
- Electric Arc Furnace (EAF) – It uses electricity to melt steel scrap and has less than half the emissions intensity of BF-BOF globally.
- Its effectiveness depends on availability of quality scrap, availability of clean electricity.
- Direct Reduced Iron (DRI) + EAF – It reduces iron ore without melting it in a blast furnace and can initially use natural gas and eventually shift to green hydrogen.
- It is considered particularly relevant for India because of limited domestic scrap availability.
- Green Hydrogen – Hydrogen produced using renewable electricity and it can replace fossil fuels in the reduction of iron ore.
- It can potentially enables near-zero-carbon steel production when combined with renewable electricity.
- Recycling – Greater use of steel scrap can:
- Reduce dependence on iron ore.
- Lower energy consumption.
- Reduce emissions.
- Support circular economy principles.
What Government Initiatives are taken in this regard?
- National Mission on Green Steel – Targets reduction of steel emission intensity from 2.55–2.65 to 2.2 tCO₂e/tonne by 2029–30.
- For example, Green Steel Certification Scheme identify steel as green based on measurements.
- Green Hydrogen Pilots – The Ministry of New and Renewable Energy has supported three pilot green-hydrogen projects for low-carbon steel production.
- Industrial projects are also testing green hydrogen in DRI-based steelmaking.
What are the Emerging Challenges associated with Green Steel Production?
- Limited Scrap Availability – India lacks sufficient high-quality scrap to rapidly shift entirely towards scrap-based EAF production.
- Green Hydrogen Cost – Green hydrogen remains expensive and its large-scale availability is uncertain.
- Renewable Electricity Requirement – Large-scale electrification of steelmaking requires abundant and reliable low-carbon electricity.
- Coal-based Investment Lock-in – New BF-BOF plants and furnace relining can create long-lived carbon-intensive assets.
- Limited demand– Low-carbon steel is currently more expensive, while demand for green steel remains limited.
- Natural Gas Dependence – Using natural gas as a transition fuel can reduce emissions compared with coal but creates:
- Import dependence.
- Price and supply risks.
- Geopolitical vulnerabilities.
- Risk of stranded gas infrastructure.
- International Trade Pressure – The EU’s Carbon Border Adjustment Mechanism (CBAM) increases pressure on Indian steel exporters to reduce their carbon intensity.
What could be done?
- Prioritise DRI-EAF over new BF-BOF capacity wherever feasible.
- Avoid unnecessary relining of young blast furnaces where alternative investments are viable.
- Scale up green hydrogen production and reduce its cost, expand renewable-energy capacity dedicated to industrial decarbonisation.
- Develop a stronger scrap collection and recycling ecosystem.
- Create domestic demand for green steel through green public procurement and infrastructure projects.
- Ensure a just transition for workers and regions dependent on coal-intensive steelmaking.
What lies ahead?
- India's expanding steel demand presents both a climate challenge and an investment opportunity.
- Rather than repeating trajectory of thermal power, India can redirect upcoming investments towards EAF, DRI and eventually green-hydrogen-based steelmaking.
- Early technological choices can prevent carbon lock-in, improve India's competitiveness under emerging carbon-trade regimes.
Reference
The Hindu| Green Steel in India
