Government support and customers' readiness to pay more for cleaner steel can ease the transition towards more environmentally-friendly ways of steel production, according to Indian producer Tata Steel.
European governments and the steel industry have a plan to decarbonise, with huge investments in infrastructure to generate and make hydrogen available and a gas infrastructure already in place, said Tata chief executive and managing director TV Narendran. But there is not enough scrap and gas available in India to produce cleaner steel, leaving the industry to use only iron ore and coal as steel feedstocks, he added. Tata produced 7.76mn t of steel across its European and Indian operations in the October-December quarter of the 2021-22 fiscal year ending 31 March, with India accounting for around 62pc of output. The company's primary European operations are based in Netherlands and the UK, with its Indian steelworks at Kalinganagar and Jamshedpur.
"In Europe everyone is clear that this transition cannot be afforded just by the industry. The industry will pay part of the cost, governments have to support it and customers have to pay more for green steel. Otherwise, who's going to pay for this transition," Narendran said. The EUs Carbon Border Adjustment Mechanism (CBAM) will ensure that the additional costs incurred by the steel industry is not putting them at a disadvantage compared with others that can make steel cheaper through other process routes and sell it in Europe, he added.
Importers under CBAM are required to purchase a certificate for the difference between the carbon content of the imported product and the same product produced in the EU as an adjustment amount. The mechanism is scheduled to be rolled out in a transition phase from 2023 and fully from 2026.
Indian steel producers have sought government policy support to accelerate 'green' steel output through research and development in hydrogen and incentives and subsidies towards new technology.
Tata said the use of carbon capture utilisation and storage with blast furnaces, upgrading the quality of raw materials and using more scrap in steel production will lower the global carbon footprint significantly. With gas and hydrogen infrastructure growth in India, the company can move towards gas-based direct reduced iron (DRI) or hydrogen-based DRI steel production in the future, it said.
Tata last month started a trial for continuous injection of coal-bed methane gas at one of the Jamshedpur blast furnaces to reduce emissions. It said it has already cut the use of coking coal in steel production by more than 100kg/t over the last few years.
Tata's Roadmap Plus programme at its Netherlands steelworks also aims to reduce emissions over the next three years.
