Why in the News?

India has committed to submitting a more ambitious Nationally Determined Contribution (NDC) before COP30, marking a move from limited climate action to economy-wide decarbonisation. Steel has become a key focus because it accounts for about 12% of India’s total carbon emissions, and steel production is expected to rise from around 125 million tonnes to over 400 million tonnes by mid-century. If action is delayed, current investments could lead to carbon lock-in through coal-based blast furnace technologies, weakening climate targets and reducing export competitiveness as global carbon regulations such as the EU’s Carbon Border Adjustment Mechanism (CBAM) become stricter.

Why is steel central to India’s climate challenge?

1. Emissions intensity: Accounts for ~12% of national carbon emissions, largely due to coal-dependent blast furnace routes.
2. Scale of growth: Projected production increase to 400+ million tonnes risks amplifying emissions without structural change.
3. Capital lock-in: Steel plants have long life cycles; delayed transition locks emissions for decades.
4. Economic implications: Carbon-intensive steel risks becoming uncompetitive and unattractive for investment in the medium term.

What risks arise from delaying the transition to green steel?

1. High-carbon lock-in: Continued investment in blast furnaces entrenches coal dependence.
2. Trade vulnerability: Exposure to carbon border taxes under mechanisms such as EU CBAM.
3. Lost competitiveness: Countries transitioning early gain cost and technology advantages.
4. Economic damage: Billions locked in carbon-inefficient technologies impose future adjustment costs on industry and the economy.

What global lessons shape India’s green steel strategy?

1. International shift: China, Japan, and South Korea are scaling scrap-based secondary steel and hydrogen pathways.
2. EU regulatory pressure: CBAM compels exporting countries to decarbonise steel production.
3. Carbon pricing signal: European experience shows near-zero emission steel becomes viable only when carbon prices approach $90-$100 per tonne.
4. First-mover advantage: Early adopters gain market access, finance, and technology leadership.

What policy progress has India made so far?

1. Green Steel Roadmap: Signals a clear long-term decarbonisation pathway for the sector.
2. Green Steel Taxonomy: Establishes definitions and classification for low-carbon steel.
3. National Hydrogen Mission: Supports hydrogen-based steelmaking.
4. PAT expansion: Introduces intensity-based emission targets for 253 steel units.
5. Carbon Credit Trading Scheme (CCTS): Creates market incentives for emissions reduction.

What constraints continue to slow the transition?

1. Hydrogen scarcity: Limited availability of affordable green hydrogen.
2. Energy bottlenecks: Insufficient renewable power dedicated to industrial use.
3. Scrap availability: Informal scrap market limits consistent supply.
4. Technology maturity: Carbon capture and storage (CCS) remains costly and low in maturity.
5. Financial risk: High capital costs deter private investment without policy certainty.

What role must the government play going forward?

1. Regulatory clarity: Establishes firm short-, medium-, and long-term carbon targets.
2. Carbon pricing: Integrates blast furnaces into carbon pricing at the earliest.
3. Infrastructure support: Enables shared access to green electricity, hydrogen pipelines, and CO₂ transport networks.
4. Fiscal support: Provides targeted incentives, especially for smaller producers.
5. Market creation: Uses public procurement to create demand for green steel.

Conclusion

Green steel is no longer optional for India’s climate or economic strategy. It is a strategic imperative linking decarbonisation, industrial competitiveness, and global leadership. By aligning regulation, infrastructure, and finance, India can avoid carbon lock-in, protect export markets, and position itself as a leader in sustainable industrialisation.

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