India mulls government support for green steel

The Indian government is considering ways to generate demand for pricier low-carbon steel from state-owned and private-sector consumers, in a move to accelerate the decarbonisation of the sector.

Policy recommendations — including raising the use of low-carbon steel in government projects and centralising bulk procurement — were outlined in a new green steel "roadmap" issued by the Indian steel ministry on 10 September.

Low-carbon steel is relatively priced at a premium to steel produced using traditional methods, making it challenging to generate its demand. The use of capital-intensive techniques to lower emissions would ultimately push up steel production costs by 10-15pc and subsequently raise input costs for consumers, according to a ministry's report.

It will take time for Indian consumers to become active buyers of costlier green steel, industry participants said at the Indian Steel Association (ISA) Steel Conclave in Delhi earlier in September.

Instead, they said India is likely to find its first buyers for green steel in overseas markets such as Europe where measures such as the upcoming carbon border adjustment mechanism (CBAM) will put a carbon levy on some imports.

The ministry's report recommends developing a "green public procurement" policy aimed at increasing the uptake of low-carbon steel in domestic infrastructure and defence projects, many of which are funded by the government.

The Indian government will now launch a green steel "mission," steel ministry secretary Sandeep Poundrik said following the report's release.

"It was suggested the government can have a procurement push for green steel at least in government projects. That we will consider when we make the mission," he said.

The report also suggested setting up a central agency for bulk purchases of green steel. Tax incentives and higher environmental, social, and corporate governance ratings could encourage private-sector consumers such as auto manufacturers to buy green steel, according to the action plan charted out in the report.

One of the top goals outlined for the first phase of the action plan is for the government to draft a green steel procurement policy, something which could reduce the steel industry's carbon emissions intensity to 2.2t of CO2 per tonne of crude steel produced (tCO2/tcs) by 2030, according to the report. The Indian iron and steel sector's CO2 emissions intensity was 2.55 tCO2/tcs as of 2022.

The Indian steel industry accounts for 12pc of the country's carbon emissions.

Hydrogen, CCUS long-term goals

On the supply side, the initial focus will be to lower energy consumption through methods such as scrap-based production and the elevated use of renewable energy sources. The ministry's action plan aims for renewable energy penetration of 45pc in the steel sector by 2030.

The government and steel industry should invest in developing green hydrogen, carbon capture, utilisation and storage (CCUS) and biochar after 2030, according to the roadmap. These measures are currently at a nascent stage, with experiments underway to see if they could partially replace the use of coal in traditional blast furnaces.

The roadmap is based on the findings of 14 task forces appointed by the ministry to explore ways to decarbonise the hard-to-abate steel industry.

By Amruta Khandekar