Achieving Green Steel Roadmap
Achieving Green Steel Roadmap
Achieving Green Steel Roadmap
Authors
Will Hall, Visiting Fellow, TERI (till June 2022)
Reviewer
Mr Girish Sethi, Senior Director, TERI
Disclaimer
This report is an output of a research exercise undertaken by TERI supported by CIFF. It does not represent
the views of the supporting organisations or the acknowledged individuals. While every effort has been
made to avoid any mistakes or omissions, TERI would not be in any way liable to any persons/organisations
by reason for any mistake or omission in the publication.
Suggested Citation
Will Hall, Sachin Kumar, Sneha Kashyap, Shruti Dayal. 2022. Achieving Green Steel: Roadmap to a net zero
steel sector in India. New Delhi: The Energy and Resources Institute (TERI)
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | iii |
ENERGY TRANSITIONS
COMMISSION INDIA
Energy Transitions Commission (ETC) India is a research platform based in The Energy and
Resources Institute (TERI) in Delhi. ETC India is the Indian chapter of the global Energy
Transitions Commission, which is chaired by Lord Adair Turner.
In 2018, ETC launched its ‘Mission Possible’ report, which detailed decarbonization
pathways for the ‘hard-to-abate’ sectors. This included a sectoral focus on steel, which
provided the impetus to start work on the same in India.
ETC India initiated activities in 2017-18 with a focus on the decarbonization of India’s power
sector. Whilst that work is still continuing, ETC India has also started to work on industry
transformation, particularly in the ‘harder-to-abate’ sectors including iron & steel, cement,
and other industry sub-sectors.
ACKNOWLEDGEMENTS
We would like to extend our sincere thanks to the Children’s Investment Fund Foundation.
This work would not have been possible without their financial support. Their contribution
was vital in continuing the conversation on a low carbon transition for the Indian iron and
steel sector.
We would also like to acknowledge the support of ETC, which has already done so much to
advance the conversation around decarbonising the heavy industry sectors. The comments
and advice from Lord Adair Turner and his team including Mr. Rob Campbell-Davis and
Mr. Philip Lake feature extensively in this work.
TERI would like to thank Dr. P.K. Sen (Steel Tech Center, IIT Kharagpur), Mr. Deependra
Kashiva (Sponge Iron Manufacturer’s Association), Mr. Subrata Basu (Shell India),
Mr. Anirban Ghosh (Mahindra Group) and World Resources Institute for providing a review
of this report. We would like to thank Mr. ACR Das (Former Industrial Adviser, Ministry of
Steel) for his extensive contribution and advice.
We would also like to thank the steel companies and associated organisations who
provided vital inputs for this report, including Mr. Chanakya Chaudhary (Tata Steel India),
Ms. Ajanta Sengupta (Steel Authority India Limited), Mr. Prabodh Acharya (JSW Steel), and
Dr. Mukesh Kumar (Steel Research & Technology Mission of India).
We would also like to acknowledge the support of Mr. R R Rashmi (TERI) for reviewing and
providing valuable remarks on this document.
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ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | ix |
TABLE OF CONTENTS
Executive Summary ............................................................................................................................. 3
Introduction ...................................................................................................................................5
1. Background ................................................................................................................................. 6
1.1 Indian steel industry..............................................................................................................7
1.2 Global steel industry............................................................................................................. 9
1.3 Macro-trends.......................................................................................................................10
1.3.1 Development............................................................................................................10
1.3.2 Digitalisation............................................................................................................12
1.3.3 Decarbonisation........................................................................................................ 13
2. Macroeconomic impacts.................................................................................................................15
2.1 Overview..............................................................................................................................16
2.2 Investment and profitability..................................................................................................16
2.3 Regional impacts .................................................................................................................16
2.4 Employment.........................................................................................................................18
3. Challenges ................................................................................................................................19
3.1 Competitiveness................................................................................................................. 20
3.2 Rapid growth required in the near term.................................................................................21
3.3 Technology availability ....................................................................................................... 22
3.4 Capital requirements........................................................................................................... 24
4. Transition pathway........................................................................................................................ 25
4.1 Structure of Indian steel assets............................................................................................ 26
4.2 Technology option assessment............................................................................................ 28
4.3 Pathways to net zero............................................................................................................ 31
5. Achieving Green Steel: Action Plan................................................................................................ 35
5.1 Maximize energy efficiency.................................................................................................. 36
5.2 Increase scrap utilisation.....................................................................................................37
5.3 Create procurement alliances .............................................................................................. 38
5.4 Introduce green product standards...................................................................................... 38
5.5 Promote technical research & development and set-up demonstration plants....................... 39
5.6 Future-proof new capacity.................................................................................................... 39
5.7 Lay the groundwork for a domestic carbon trading market.................................................... 40
5.8 Support for commercial-scale plants.................................................................................... 40
5.9 Implement a carbon border tariff..........................................................................................41
5.10 Retire older, polluting facilities............................................................................................ 42
Conclusions ................................................................................................................................ 44
Bibliography .................................................................................................................................45
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LIST OF FIGURES
LIST OF TABLES
GLOSSARY
AI – Artificial Intelligence
BEE – Bureau of Energy Efficiency
BF-BOF – Blast Furnace – Basic Oxygen Furnace
BIS –Bureau of Indian Standards
CAGR – Compounded Annual Growth Rate
CBAM – Carbon Border Adjustment Mechanism
CCUS – Carbon Capture, Use and Storage
CO2 – Carbon Dioxide DR – Direct Reduction
EAF – Electric Arc Furnace
EBITDA – Earnings before Interest, Taxes, Depreciation, and Amortization
EIF – Electric Induction Furnace
ETS – Emissions Trading Scheme
FDI – Foreign Direct Investment
FTA – Free Trade Agreements
GDP – Gross Domestic Product
GHG – Greenhouse Gases
GoI – Government of India
IEA – International Energy Agency
H2 – Hydrogen
IoT – Internet of Things
ML – Machine Learning
MoS – Ministry of Steel
Mt – Millions of tonnes
Mtoe – Million Tonnes of Oil Equivalent
Mtpa – Millions of tonnes per annum
NCAER – National Council of Applied Economic Research
NG – Natural Gas
NSP – National Steel Policy
PAT – Perform, Achieve and Trade
TRL – Technology Readiness Level
WSA – World Steel Association
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 1 |
EXECUTIVE SUMMARY
• The global steel sector is shifting rapidly. More than 30% of steel companies (by
production) have net zero targets - up from zero less than 3 years ago - and more
than 90% of countries (by GDP) have national level net zero targets.
• Governments are moving fast to create ‘level playing fields’ to protect domestic
steel sectors during transition, including carbon border adjustment proposals,
commitments to joint standardization and climate clubs.
• The financial sector is shifting funds away from fossil investments, with a
significant additional push from COP26 under the Glasgow Financial Alliance
for Net Zero (GFANZ), as well as more steel-focused efforts from the Centre for
Climate-Aligned Finance (RMI).
• Steel buyers in the construction, automotive and metal products sectors,
both public and private, are signaling a commitment to buy green steel. This
includes the First Movers Coalition (FMC), Steel Zero and CEM Industrial Deep
Decarbonisation initiatives.
• The Indian steel sector is at a crossroad. To continue to compete globally, increase
exports to a range of markets, champion domestic technology development, and
drastically cut emissions the sector will need to accelerate the deployment of low
emission technologies in line with net zero by the mid-century.
• Cutting emissions on a slower trajectory out to 2070, as may be possible with
other sectors which are less exposed to international trade, risks limiting Indian
steel exports and the ability to lead on low emission steelmaking technology
development and deployment.
• This will not be easy, with the scaling of sufficient renewable energy, for both
direct use and for green hydrogen production, being the primary hurdle to
meeting net zero.
• In order to meet this challenge, the sector will need to make bold decisions on new
technologies, rapidly build out enabling infrastructure, supported by domestic
policy and international finance. The result will be a globally competitive steel
sector, supporting India’s ambitions of a self-reliant, net zero major economy.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 5 |
INTRODUCTION
The steel sector plays an important role in the Indian economy and has been a core pillar of India’s industrial
development. As a critical input for various sectors, steel will play a major role in helping India support the
infrastructure that facilitates growth, the housing that drives urbanisation, and the machinery and tools
that power industrialisation. The sector is expected to experience significant growth in the coming decades
to satisfy these demands.
However, if India is to continue to show leadership on climate change and future-proof its steel industry
for a net zero world, then an ambitious strategy for emissions reduction is required. In doing so, India can
pioneer a model of “industrialisation without carbonisation”, setting an example for emerging economies
around the world.
This report sets out such a strategy, by detailing the short-term (2020-2030) and the long-term (2030
onwards) actions required to achieve net-zero emissions for the sector by 2070. This includes measures
to maximise energy efficiency, increase scrap utilisation, set green product standards, develop public and
private procurement targets and build commercial-scale demonstration plants in the nearer-term. Over the
longer-term, this activity should inform a more comprehensive policy framework that will assist a mass-
market switch to green steel production and use, supported by phase-out policies for older, polluting
plants, alongside support for new, near zero emission plants.
In doing so, this roadmap quantifies the scale of the challenge, setting out in clear terms what is required
for India is to put itself on pathway to net-zero by 2070. This includes support for technology development
and capacity building, to introduce the latest technologies into the Indian market, facilitated via existing
partnerships with developed countries. Alongside this, collaboration on market creation policies, such
as green product standards and procurement targets, can help ensure that the Indian steel industry is
prepared to compete in the global steel market as it transitions to low emission production.
This roadmap is a follow-up to the consultation document published by TERI in 2020, “Towards a Low
Carbon Steel Sector: An overview of the changing market, technology and policy context for Indian steel”.
The updated consultation document is available at our website as Tech Annex . The roadmap builds on this
preceding work, along with other TERI and ETC publications on steel and hydrogen1, incorporating in the
detailed comments and feedback from discussions with international experts, steel sector representatives,
and government officials.
The Potential Role of Hydrogen in India (Hall et. al, 2020); Green steel through hydrogen direct reduction (Hall et. al, 2021); Making the Hydrogen
1
Economy Possible (ETC, 2021); Net-Zero Steel: Sector Transition Strategy (MPP, 2021)
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1
BACKGROUND
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Background
1.1 Indian steel industry
India is currently the world’s second-largest steel producer, and second-largest steel consumer (WSA,
2020a). The steel industry in India is relatively heterogeneous compared to other countries, with a wide
range of different sized facilities in the primary and secondary steelmaking sectors. There are also several
different technologies currently being used, including the Blast Furnace – Basic Oxygen Furnace (BF-BOF),
coal-based Direct Reduction (DR), gas-based DR, Electric Induction Furnace (EIF) and Electric Arc Furnace
(EAF). BOF technology dominates a growing share of steel production, being the preferred technology
for most new capacity, with EAF and EIF taking an almost equal share of the remainder of the
market (see Figure 1).
Use of coal-based direct reduction processes is unique to the Indian steel sector. This process is mainly
used in smaller facilities to meet local steel demands, as opposed to exports. India’s reliance on this
technology is driven by availability of cheap domestic coal reserves, lack of sufficient domestic natural gas
supplies as well as domestic coking coal of sufficient quality. The use of induction furnaces along with coal-
based direct reduction often results in lower quality steel, as a result of the residual phosphorous which
is not removed, unlike with EAFs. Improving the quality of the steel from this route would require either an
additional refining step or the use of higher shares of good quality scrap. This is one of the reasons we are
likely to see the market share of this route continue to decline, with most new steel capacity focused on
the BF-BOF and EAF technologies.
27%
BOF
45%
EAF
EIF
28%
120
80
60
40
20
0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
As with any industrializing economy, the steel sector is of vital importance to India, contributing around
2% to the country’s GDP and employing around 2.5 million people in the steel and related sectors (MoS,
2020a). Crude steel production in India grew from 89 Mt in 2014-15 to 111 Mt in 2019-20. It fell to just
below 100 Mt in 2020-212 following the Covid-19 pandemic. However, the cumulative production of crude
and finished steel increased by 25% in 2021-22. The sector also experienced significant changes in the
import/export pattern from before the pandemic. Imports reduced by 39.4% and exports increased by
69.5% from 2018-19, reaching 4.8 Mt and 10.8 Mt, respectively. The import and export of steel in India
fluctuates significantly year to year, on the basis of domestic and global macroeconomic conditions, and
the demand and supply scenario in the global steel market.
In terms of production capacity, India reached 144 Mt as of mid-2021 (PIB, 2021). The private sector
contributes the majority of this (82%) with 118 Mt currently under operation. There is also significant new
capacity in the pipeline, such as the new 24 Mt Arcelor Mittal / Nippon Steel facility slated for Odisha, which
would be the largest plant in the world. Over 2020-21, utilisation rate for this capacity stood at around 70%.
Even considering the impact of Covid-19, this large utilisation gap places pressure on steelmakers profits.
This is something that will require close attention, including re-considering in commissioning dates of plants
in the current pipeline, so as not to exacerbate domestic and international overcapacity issues.
In 2017, the Ministry of Steel (MoS) launched the National Steel Policy (NSP), which included an aim to
increase India’s steelmaking capacity to 300 Mt by 2030. This policy also encompasses targets to reduce
energy consumption per tonne of steel, through adopting the latest energy efficiency measures. To support
the adoption of energy efficiency measures across a number of sectors, the GoI has developed the Perform,
Achieve and Trade (PAT) scheme, delivered through the Bureau of Energy Efficiency (BEE). The steel sector
has been covered under the PAT scheme since its inception in 2012. Until PAT cycle-III, a total energy
saving of just over 5.68 Mtoe has been achieved by 81 identified facilities within the steel sector (BEE,
2020). Alongside energy efficiency, the Government has begun efforts to increase material circularity, with
the MoS launch their Steel Scrap Recycling Policy in 2019, aimed at increasing the availability and use of
steel scrap throughout India.
China is by far the largest producer and consumer of steel, producing close to 1,000 Mt in 2019, more
than nine times the production of India, as the second largest producer. Japan, the USA, and Russia are
the other subsequent largest producers after China and India. The top five steel consuming countries are
China, India, USA, Japan, and South Korea. Figure 4 sets out a business as usual scenario for steel demand
and scrap availability in different regions around the world over the coming few decades, it is expected that
low-income and emerging economies in Africa, South and East Asia (including India), and Latin America
will drive most new growth, as demand in other developed regions such as China, Europe, Japan and South
Korea stabilises or declines. The steel demand in India will increase significantly out to 2050 making it
challenging to drastically increase scrap usage as a share of overall steel production. However in countries
such as China, an increase in scrap availability, combined with declining overall demand, will allow for a
switch to cleaner secondary production as can already be observed.
0.4%
27.7%
Oxygen
Electric
Other
71.9%
NAFTA
300
200
100
2020 2030 2040 2050
1.3 Macro-trends
In the coming decades, the iron and steel sector in India will be affected by a number of ‘macro-trends’,
which have the potential to radically change the way steel is produced and consumed. Primarily, these
are development, digitalisation, and decarbonisation. Development will drive the growth in demand for
steel across a number of key sectors, digitalisation will deliver step-changes in productivity, operational
efficiency and labour intensity of production, and decarbonisation will require new approaches to material
efficiency and circularity and the adoption of deep decarbonisation production processes.
1.3.1 Development
Steel is a material of vital importance to countries as they develop, a key input across construction,
infrastructure, and manufacturing sectors. As countries reach a certain level of economic development,
steel demand starts to saturate, as most major infrastructure is built and future steel demand can largely
be satisfied by recycling, or is replaced with alternative materials. As such, we are likely to see emerging
economies like India become the major centres of steel demand growth in the coming decades, as demand
in other major economies, such as China, stabilises.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 11 |
Forecasting demand growth out to 2050, and beyond, clearly carries a lot of uncertainty. Both the rate of
economic growth, as well as its key drivers, are uncertain. Will India follow a more service-based economy?
Or will its rate of infrastructure investment and industrialization pick up, following a path more similar to
that charted by China and other East Asian industrial powerhouses like South Korea?
In our analysis of the historical experiences of a large number of countries, we find that the most significant
determinants of steel demand are income (GDP per capita), the rate of investment (GFCF) and the level
industrialization in the economy (industrial GVA). Figure 5 sets out the relationship between GDP per capita
and true steel use for a list of 34 countries. The detailed methodology for our steel demand forecasts can
be found in Technical Annex.
The Covid-19 pandemic has sent shockwaves through global supply chains, leading to an estimated
decline in global crude steel output of 5% in 2020 relative to 2019 (WSA, 2020b). India is already the
world’s second-largest steel-producing country and is expected to increase its annual production volumes
by 2050 by an amount equivalent to twice that of the European Union’s total production in 2019. Whilst the
pandemic is likely to have a significant short-term impact on the steel sector, the underlying factors that
will drive growth over the medium and long-term, such as population growth, industrialisation, growth in
incomes, and support for major infrastructure projects such as “Gati Shakti”, will persist.
600
400
(kg finished steel)
300
200
100
0
0 10,000 20,000 30,000 40,000 50,000
1.3.2 Digitalisation
As with other sectors in the economy, the iron and steel sector is set to realise significant benefits from
the digitalisation of production processes and supply chains. This is likely to have a step-change impact in
operational efficiencies. It will be important to consider digitalisation alongside other major trends, such
as decarbonisation, to better understand the net impact of such major technological shifts.
Internet of things
3D printing Blockchain
Artificial intelligence
Digitalisation of industry is a wide-ranging area, often covered under topics such as Industry 4.0 (or 4th
Industrial Revolution), Internet of Things (IoT), cloud computing, Artificial Intelligence (AI), and Machine
Learning (ML). Emerging technologies that are being considered in the steel industry include augmented
reality, virtual reality, blockchain, artificial intelligence, 3D printing, drones, and robots (see Figure 6). In
an era of smart machines, storage systems and production facilities, the above-mentioned technologies
would be capable of autonomous information exchange, triggering actions and controlling each other
independently. This can result in significant cost-savings through reduction in labour costs, improvement
in efficiency, and minimisation of error (PwC India, 2019).
For example, Jindal Steel and Power Ltd (JSPL) has implemented an IoT framework at its facility in Angul,
Orissa, using a network of machines, advanced analytics, and highly skilled IT professionals. As a result,
the health and status of machines can be monitored remotely and immediately, greatly improving the
efficiency and productivity of the plant (CIO&Leader, 2017). Similarly, Tata Steel has been on a multi-year
digital-enabled business transformation journey intending to be the leader in digital steel making by 2025
through the adoption of digital technologies (The Economic Times, 2021). Their Kalinganagar plant has
developed an expert team of analytics specialists, including data scientists and translators.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 13 |
The net impact of digitalisation on the Indian iron and steel sector is uncertain. It represents a significant
opportunity for Indian steelmakers as build new capacity in the coming decades, able to take advantage of
the latest technologies, unavailable to other countries when they were expanding their steel production.
India has shown a proficiency for rapid adoption of new technologies in other sectors, with a relatively
young and technically literate workforce better suited to taking advantage of the latest technologies.
The increasing pace of digitalisation also represents a challenge for the sector, as improved digital systems
can reduce the need for labour in the steel production process. India has relatively high unemployment
and an urgent need for high-skilled jobs - jobs which the iron and steel sector has historically provided.
This shift needs to be factored into future conversations around a just transition for the iron and steel
sector in India, as along with a loss of employment for domestic coal production, it is likely that further
jobs may be lost within the steel plant. This needs to be balanced against the overall gains in employment
opportunities from the renewable and green hydrogen industries, that will be required to replace fossil
fuel production and import.
1.3.3 Decarbonisation
The third macro-trend, and arguably
the trend driving the most significant
TOTAL STEEL
disruption in the iron and steel PRODUCED (MN PROJECTS
TONNES P.A.)* COMPANY (WITH LAUNCH YEAR)
sector, is the growing imperative for
Baowu TBC TBC
decarbonisation. The iron and steel
Arcelor Mittal ‘21 ‘25 ‘25 ‘26 ‘28 ‘30 ‘30 TBC ‘21 ‘22 ‘26 ‘24
sector is currently both highly energy
HBIS
and emissions-intensive, accounting 2021 TBC
Nippon Steel
for 8% of global final energy use and TBC
chemicals.
Figure 7: Green steel projects pipeline
In India, total emissions from the
Source: (Vogl, et al., 2021) as of June 2022
iron and steel sector are around
250 MtCO2 (about 10% of total
emissions) and will increase more than threefold to approximately 800 MtCO2 by 2050, if no concerted
action to decarbonize is taken (Hall, Spencer & Kumar, 2020). Even with ambitious energy and material
efficiency measures to reduce energy consumption and mitigate demand growth, the level of emissions
in the Indian iron & steel sector will be incompatible with the ambition of limiting global warming to well
below 2°C.
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For further emissions reduction, the introduction of new, low carbon technologies will be required, such
as the use of low carbon hydrogen or carbon, capture, utilisation and storage (CCUS). Initially, these
new processes will increase the costs of steel production, and will require the introduction of supportive
policies by the government to help the industry through the transition, as we have seen in other sectors,
such as power and transport.
Whilst it is true that some Indian steel companies are already taking significant steps to reduce energy
consumption and emissions, the pace and scale of transition taking place in other regions, most notably
Europe and China, puts the domestic sector at risk of being left behind (Vogl, et al., 2021). Steel is a highly
traded product, although strict emissions reduction policies and associated ‘carbon leakage’ measures
will drastically reduce the size of the market for steel producers not investing in deep decarbonisation
strategies today.
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Macroeconomic Impacts
2.1 Overview
The steel sector contributes around 2% of India’s GDP (MoS, 2020a) and is valued at well over $100bn (Niti
Aayog, 2016). The indirect contribution of the sector is significantly higher, given its enabling role in several
end-use sectors including construction, infrastructure, industrial machinery and consumer products. For
this reason, it is estimated that the investment in the Indian steel sector has an output multiplier effect of
nearly 4 times on GDP and employment multiplier factor of 6.8 times (NSP, 2017), signalling its importance
for India’s future growth story.
The Ministry of Steel, under Mission Purvodaya, aims to support the development of an integrated steel hub
in eastern India to improve the competitiveness of the steel sector and facilitate regional development and
job creation. This Mission aims to facilitate investments worth $70 billion, supporting new employment
(up to 2.5 million jobs) and improvement in living standards among some of India’s less wealthy states
(MoS, 2020b).
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 17 |
Western states, such as Gujarat, Maharashtra and Karnataka, have already benefitted significantly from
good quality renewable resources (wind and solar), which will only continue as the electricity grid further
decarbonizes. There is a need to better understand the future steel making competitiveness in terms of
transporting iron or electrons across the mineral rich and highly endowed renewable resources regions
of the country. It will be vital for the success of the energy transition that its benefits are spread more
equally across India – a competitive, green steel sector in Eastern India can be an important part of that.
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2.4 Employment
The Indian steel sector currently employs approximately 2.5 million people throughout the supply chain
(MoS, 2020a). This is estimated to increase to around 3.5 million by 2030, depending on the degree of
automation (NSP, 2017). The highest-skilled jobs include engineers and metallurgists, which are vital for
the efficient operation of the plants and timely adoption of new technologies.
However, the sector is currently facing a significant skills shortage, which is being exacerbated by skilled
graduates moving away from the manufacturing sectors to the service sectors. This is being driven by
perceptions around salary, working conditions and company mission and culture. The shortage is
particularly acute for metallurgists, where there could be a shortage of around 15,000 by the mid-2020s
(NCAER, 2015). Whilst there are promising signs that this situation is improving, the sector will continue to
face tough competition from other technical sectors.
For this reason, the steel sector needs to rapidly improve its offer to young graduates. An ambitious
strategy for decarbonizing production and supporting the transition to net zero will be vital for attracting
and retaining the best talent. According to a survey of ‘Generation Z’ students and professionals (born
between 1997 and 2012), 63% state working for a company that limits their impact on the environment
as a priority (Deloitte, 2021). Although attracting the young talent does not appear to be an issue for
Indian steel sector at present, coming out with an ambitious strategy for decarbonising production and
supporting the transition to net zero might help the steel industry in motivating best talent to work in this
sector.
18
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3
CHALLENGES
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Challenges
This section covers some of the key challenges that are being faced by the Indian iron and steel sector for
decarbonisation. These include cost-competitiveness of production, rapid growth of domestic demand,
and the availability of the required low emission technologies.
3.1 Competitiveness
Whilst there have been significant improvements in the operational efficiencies of steel production in
India in recent years, on average, Indian steel producers are still facing costs around 5-10% higher as
compared to the global average. In the context of a global glut in steel supply, this places Indian steel
producers in a difficult position, reducing profits for reinvestment and limiting export markets. The cost
premium is driven by a number of factors (see Table 1), with the main contributors being costs of finance
(approximately 12% versus 3-5% across the European Union) and the costs of logistics and infrastructure.
For the latter, steel producers pay relatively high costs of raw material transport on Indian Railways, which
subsidises passenger transport (Kamboj & Tongia, 2018) and requires significant investment to modernise
(PwC, 2019).
This, along with other factors, places India at a comparative disadvantage relative to other major producers,
such as China, Japan and South Korea, in some areas of higher technical sophistication, including stainless
steel and alloy steel production. In addition, India’s Free Trade Agreements (FTAs) with South Korea and
Japan under the Comprehensive Economic Partnership Agreement in 2010 and 2012 respectively, have led
to a steady reduction in import duties for steel. These have fallen to 0.8% for Japan and 1.25% for Korea
(Niti Aayog, 2016). As a result, combined steel imports from Japan and Korea increased by 71% to 3.8 Mt
in 2019-20. To help improve the relative competitiveness of domestic producers, the Government has
recently approved the Production Linked Incentive Scheme for ‘Speciality Steel’ (PIB, 2021), although it is
too early to assess the effectiveness of this programme.
The impact of this, along with the global glut of steel supply, has contributed towards a steady decline in
the EBITDA3 margin for the steel sector. Figure 9 shows this decline for the five largest producers in India,
including Tata Steel, JSW, SAIL, JSPL, and Jindal Stainless Steel Ltd up until 2018. However, there has been
a significant upswing in more recent years, with several Indian steel producers posting record high EBITDA
margins (Tata Steel at 43% for FY2021), which suggests that these pressures are lessening.
125%
94%
EBITDA/Net Sales (%)
63%
31%
0%
-31%
2007-08 2009-10 2011-12 2013-14 2015-16 2017-18 2019-20
By 2050, in the Baseline scenario, we expect steel demand per capita to nearly quadruple to 295 kg per
capita. This would make it similar to middle to high income economies today, being equivalent to the
average true steel use per capita across the European Union (WSA, 2020a). Whilst the growth rate implied
by these projections is high (5% CAGR), we believe this is plausible, given the vast amount of steel that
India still requires to develop.
4
The Resource Efficiency scenario includes more optimistic assumptions around the lifetime of steel products, the recycling rate, replacement of steel
with alternative materials and light weighting through intelligent design.
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500
-25%
400
Steel Demand (Mt)
300
200
100
0
2000 2010 2020 2030 2040 2050
Whilst rapid growth in steel demand is positive to support India’s development, the near-term requirements
for new steel production place additional pressures on the sector as new green steel production
technologies are still not deployed at scale even in developed countries. This puts new capacity additions
at risk of being stranded in later life, as the global steel sector decarbonises and high emitting steel
production becomes less competitive.
Each of these technologies differ in their suitability to the Indian context, based on their commercial
availability, ability to reduce emissions, and interface with India’s existing infrastructure and resource
profile. An overview is provided in Table 2.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 23 |
HISARNA
BIOMASS
STEEL
CCS ANOL
CCU/ CARBON
CCUS
Carbon EOR on BIOMASS
2 Chem DRI
H2
Reduction
H2
Production
COURSE
50
GrinHy
SIDERWIN
ELECTRIC
HYBRIT SUSTEEL
H2 Molten
FUTURE Oxide
Flash
Oxide Elec.
Smelting
SALCOS
HYDROGEN ELECTRIC
Figure 11: Overview of decarbonisation technology projects for the iron and steel sector
Beyond the quantum of finance required for new projects, efforts to lower borrowing rates will also be
required, as mentioned above. Introducing blended finance options that can lower costs of borrowing,
supported by public loans domestically, or from international finance via multi-lateral development banks
will be vital to accelerate the deployment of new near zero emission plants.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 25 |
4
TRANSITION
PATHWAY
| 26 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
Transition Pathway
4.1 Structure of Indian steel assets
Before exploring future pathways for the Indian steel sector, it is worth outlining the structure of existing
assets. Principally, we are concerned with (a) the technological make-up and (b) lifetime of the existing
assets, as these two factors will be most influential in setting the future direction of the Indian steel sector.
The current make-up of India’s iron and steelmaking facilities shows an accelerating trend towards larger,
integrated steel plants using blast furnace, basic oxygen furnace and electric arc furnace technologies, as
per global trends. There is still a relatively significant share of coal-based sponge iron units and electric
induction furnaces, although we can expect these to continue to decline over the coming decades as more
efficient technologies are adopted.
The preference for blast furnace technology, which is also clear in the pipeline of committed projects,
represents a challenge for the future transition to low emissions steel in India. As we will come on to, CCUS
technology for blast furnaces can be expensive (especially at higher capture rates) and there are questions
around suitability for the Indian context due to availability of CO2 stores.
Given this challenge for blast furnaces, it is useful to understand the age profile of these assets in India
and when they might enter a stage of reinvestment. India has seen a relatively steady growth in blast
furnace technology since the 1960s, with a marked acceleration in deployment since 2000 from which
point two-thirds of blast furnace capacity was added.
42
49 57
80
49
1.65
90
80
70
Blast furnace capacity (Mt)
60
50
40
30
20
10
0
1960 1970 1980 1990 2000 2010 2020
Based on the largest assessment of blast furnace capacity done to date (Vogl, Olsson & Nykvist, 2021), we
can understand in more detail about the lifetime of this technology and timescales for reinvestment. The
average blast furnace can last around 45 to 50 years, with between 2 and 3 relining campaigns occurring
over that timeframe. The length of time between campaigns tends to decrease the more that take place
(see Figure 14).
20
15
Years
10
19
16
5 10.5
0
Campaign 1 Campaign 2 Campaign 3
Figure 14: Global average reinvestment timeframes for blast furnace relining
Source: (Vogl, Olsson & Nykvist, 2021)
| 28 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
Relining the blast furnace represents the most significant investment over the lifetime of such a facility
and therefore provides a point in time where the producer could choose between prolonging the life of
such a plant, retrofitting with new low emissions technology, or mothballing to be replaced by a new, low
emissions technology. The option of mothballing the plant will certainly be less likely after just a single
campaign considering the remaining economic lifetime of other parts of the plant, such as the coke oven
and sinter plant.
Based on the average reinvestment timeframes shown in Figure 14, existing blast furnace capacity in India
will all reach the end of its lifetime by 2040 (see Figure 15). Much of this capacity from the 2000s will likely
only be entering its second campaign, thus limiting the potential of a complete technology switch without
significant policy support.
35
30
Blast furnace capacity (Mt)
25
20
15
10
0
2021-25 2026-30 2031-2035 2036-2040 2041-2045 2046-2050
Figure 15: Reinvestment timeframe for existing blast furnace capacity in India
Source: (Agora Industry, 2021)
Based on this assessment, we observe that the costs of steel production from the main conventional
routes in India range from around $300/t of crude steel, to just below $500/t. The cheapest route in this
Towards a Low Carbon Steel Sector (Hall et. al, 2020); The Potential Role of Hydrogen in India (Hall et. al, 2020); Green steel through hydrogen direct
5
reduction (Hall et. al, 2021); Net-Zero Steel: Sector Transition Strategy (MPP, 2021)
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 29 |
analysis is the coal-based direct reduction using a rotary kiln. Lower capital and operational costs, as well
as having access to cheaper, domestically available fuel mean that this route is one of the cheaper ways
to produce steel in India today. However, many of these plants are highly polluting and the quality of steel
produced is not always sufficient for certain specialist applications.
Next most competitive is the blast furnace with basic oxygen furnace (BF-BOF), which is the dominant route
in India. Costs of steel production vary based on the costs of coking coal, which can fluctuate significantly
over time (CRISIL, 2018). Natural gas direct reduction is costlier in India due to the higher costs of natural
gas, as well as uncertainty around its continuous availability. The range illustrated assumes delivered
costs of $8/mmbtu to $12/mmbtu, which represents the historical range of imported natural gas prices,
although current prices have been significantly higher.
The costs of smelting reduction with CCUS assume that both capital and fixed operating costs are reduced
versus the BF-BOF plant due to the removal of coke ovens, sintering plants and pellet factories. Moreover,
using thermal coal over coking coal reduces the fuel costs. Without CCUS costs, the costs of steel
production from a smelting reduction plant would be around 20% cheaper than the conventional BF-BOF
route (Figure 43). However, with the addition of CCUS infrastructure at cost of around $20/tCO2 (IEA, 2020)
(a range of $20-$80 is shown to reflect uncertainty), costs would be near equivalent to existing BF-BOF.
There are also considerable uncertainties with regard to the availability of suitable sites for CCUS near the
steel plant locations as well as the costs of CCUS infrastructure in India, which are reflected in the larger
cost range for the SR-BOF CCUS route.
600
500
Cost of production ($/t)
400
300
200
100
0
BF-BOF Coal DR-EAF NG DR-EAF SR-BOF H2 DR-EAF MOE-EAF
CCUS
6
BF-BOF = Blast Furnace – Basic Oxygen Furnace, Coal DR-EAF = Coal-based Direct Reduction – Electric Arc Furnace, NG DR-EAF = Natural gas-based
Direct Reduction – Electric Arc Furnace, SR-BOF CCUS = Smelting Reduction – Basic Oxygen Furnace with Carbon Capture, Usage and or Storage, H2
DR-EAF = Hydrogen-based Direct Reduction – Electric Arc Furnace, MOE-EAF = Molten Oxide Electrolysis – Electric Arc Furnace.
| 30 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
Costs of production from the hydrogen direct reduction route are largely similar to those in the natural
gas direct reduction route, with the main difference being the cost of hydrogen as a fuel versus natural
gas. In our cost analysis, we assume that hydrogen is purchased from a separate producer by the steel
plant, as opposed to having the capital costs of the electrolysers included in the capital costs of the steel
plant. Today, costs of electrolytic hydrogen can be as high as $4/kg, factoring in costs of transportation
and storage infrastructure, although this is falling rapidly. Assuming the hydrogen is produced on-site, we
provide a range of costs between $1.5/kg and $3/kg.
Based on these ranges, it would appear that the smelting reduction route with CCUS would be cheaper than
the hydrogen direct reduction route (provided there are suitable sites closer to the steel plant locations).
One key sensitivity to explore in a little more detail is how the cost of hydrogen would impact their relative
competitiveness and how falling costs of green hydrogen could change this over time.
In Figure 17, we present the range of costs for a smelting reduction plant with CCUS, as well as declining
costs of steel produced via the hydrogen direct reduction route, based on declining costs of hydrogen. With
costs in excess of $4/kg today, we can see that hydrogen direct reduction is consistently more expensive
than the smelting reduction route. However, as costs of green hydrogen start to fall over time, potentially
reaching $2/kg in 2030 and $1/kg in 2050 in the most suitable geographies, hydrogen direct reduction
could start to compete.
It is worth noting that since the publication of our hydrogen report, which covered this in detail, there
have been several key developments in this space. Firstly, the only major smelting reduction with CCUS
TERI TERI
2050 2030
700
600
Cost of production ($/t)
500 $80/tCO2
Cost of CCS
400 $20/tCO2
300
200
100
0
0 1 2 3 4 5 6
Hydrogen Cost ($/kg)
pilot facility, being taken forward by Tata Steel Europe in the Netherlands has now switched to developing
a hydrogen direct reduction facility, signalling the industry’s relative support for these technologies.
Conversely, there are over 30 (and growing) hydrogen direct reduction projects.
Secondly, our estimates for the costs of producing hydrogen in India, whilst among the most ambitious
when published, have been superseded by several Indian corporates own targets in this space. Most
notable is Mukesh Ambani’s aim to use the expertise of Reliance Industries to produce hydrogen for $1/kg
by 2030. Alongside other players, such as NTPC, Ohmium and RenewPower, who are similarly taking green
hydrogen production very seriously, you could well see the target of $1/kg being hit much sooner than our
initial estimate of 2050, making hydrogen direct reduction competitive even earlier.
In the NZ2070 scenario, we can see new low emission technologies introduced rapidly from 2030 onwards,
with a number of trials and demonstrations taking place in the 2020s. As shown by our earlier analysis,
the main primary route to replace the blast furnace is hydrogen direct reduction. This can be scaled rapidly
from the 2030s, at which point it will start to compete directly with the less efficient conventional plants.
600
500
Steel production (Mt)
400
300
200
100
0
2020 2030 2040 2050 2060 2070
From 2040 onwards, we also see some early MOE plants being deployed. They are at an earlier stage of
development versus the hydrogen route but could prove competitive in certain areas without access to
hydrogen, as they use a similar amount of electricity. Scrap-based EAFs will see an ever-increasing role,
although will be limited by the domestic availability of scrap. No import of scrap is assumed.
In terms of phasing out existing, high emission facilities, we see a relatively significant role for CCUS
to help manage the large number of BF-BOF facilities. Whilst relatively expensive to fit these facilities
with CCUS versus using alternative low emission routes, it may prove financially viable for those facilities
located close to cost-effective CO2 storage, who are entering their 2nd or 3rd relining campaign (see Section
4.1). Beyond 2070, we expect these will all be mothballed at the end of their economic lifetime, in favour
of other low emission routes.
We expect coal-based DR facilities to be phased out much faster, given their high emissions and shorter
lifetimes versus BF-BOF. In this scenario, we expect natural gas-based DR facilities to increase out to 2050,
providing a readily accessible transition fuel, allowing new primary capacity to be built without resorting
to the ‘harder to transition’ BF-BOF. As aforementioned, this could see natural gas-based facilities being
built in the 20s, 30s and 40s, to steadily be replaced by green hydrogen, which can be blended in over
time.
We also explore an alternative scenario, where the steel sector also meets the Government’s target to
be self-reliant, in line with Atmanirbhar Bharat’ by 2047. In this scenario, we assume that the sector also
achieves Net Zero by 2050, supported by domestic energy resources alone. This highlights the important
joining together of the Net Zero vision, along with a vision of self-reliance, which can both support one
another.
600
500
Steel production (Mt)
400
300
200
100
0
2020 2030 2040 2050 2060 2070
In the NZ2050 scenario, low emission technologies are introduced at an even faster rate, with the most
significant additions being made up by hydrogen direct reduction, followed by MOE. The greater challenge
here is phasing out blast furnaces faster, potentially before the end of their useful lifetime. This is largely
due to the limits on domestic coking coal of an adequate quality. Today, India imports over 80% of its
coking coal, due to domestic shortages and quality issues. The National Steel Policy aims to reduce import
dependence by 65% by 2030 and Coal India is taking some steps to support this, such as establishing new
washeries. Based on this, we assume that domestic coking coal production reaches around 45 Mt by 2050
(see Figure 20), up from around 20 Mt today, reducing import dependence to 0%.
120
100
Coking coal demand (Mt)
80
60
40
20
0
2020 2030 2040 2050 2060 2070
NZ2070 NZ2050
Natural gas-based direct reduction facilities are phased out even faster in the NZ2050 scenario versus
the NZ2070 scenario, implying a more rapid transition to 100% hydrogen. This would be the result of a
more rapid reduction in the costs of green hydrogen, in line with some of the more ambitious company
statements we’ve seen from major Indian corporates. This would see natural gas completely phased out
by 2050, leaving domestic gas reserves available for sectors, such as fertilisers and city gas distribution
networks (see Figure 21).
One of the major challenges for achieving such a scenario is the rate at which new renewable electricity
production needs to be scaled up. These estimates include electricity for scrap EAF, MOE and green hydrogen
production6. For the NZ2070 scenario, the challenge is already extreme, with production increasing 10-fold
to 70 TWh by 2030, nearly 4-fold again to 260 TWh by 2050 and then more than 3-fold again by 2070 to 900
TWh. This represents 65% of India’s electricity production today, for just a single sector.
6
Electricity consumption assumptions = 650 kWh for EAF, 3.4 MWh for MOE and 2.9 MWh for H2DR
| 34 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
30
25
Natural gas demand (MCM)
20
15
10
0
2020 2030 2040 2050 2060 2070
NZ2070 NZ2050
1200
1000
Electricity demand (TWh)
800
600
400
200
0
2020 2030 2040 2050 2060 2070
NZ2070 NZ2050
In the NZ2050 scenario, the challenge is even more extreme with demand increasing by 100-fold between
now and 2050, before reaching just over 1,000 TWh in 2070. This faster ramp-up is required in order to
meet the dual targets of net zero and self-reliance. To put this in the context of India’s current installations,
overall renewable deployment hit 100 GW in 2021. For the steel sector alone, the NZ2050 scenario would
require around 45 GW by 2030, rising to 330 GW by 2050. This, alongside the rest of the economy electrifying
(transport, heating / cooling, other industry, etc.), represents one of the most significant challenges for
the transition to low emission steelmaking, both in the NZ2070 and NZ2050 scenarios.
| 35 |
5
ACHIEVING
GREEN STEEL:
ACTION PLAN
| 36 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
8
7 0.6
0.3
6 0.3
SEC (GCal/tcs)
0.9
5 0.4
0.2
4 0.4 0.3
7.1 0.4
3 6.5 Rolling
Steelmaking
2 4 2.6 Ironmaking
Cokemaking
1 0.2 Sintering
0.5
0
Breakdown
s
ng
ng
ng
T
s
ie
rs
BA
in
lin
ag
nt
he
og
er
ak
ak
ak
er
la
l
Ro
nt
Ot
em
nm
lm
l
tp
Av
no
Si
ee
en
k
ch
an
Iro
Co
St
ci
te
di
In
ed
e
In
nt
pt
rre
o
Cu
ad
y
el
id
W
* The analysis is exclusive of impact of Bio-energy use or Bio-sequestration on specific energy consumption.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 37 |
Investing in energy efficiency measures for electricity-based production (including electric arc furnaces and
induction furnaces) represent ‘low-regrets’ options for further investment. Unlike coal-based production,
most of which will most likely need to be retired by the mid-century, electricity-based production routes
will continue to decarbonise as the electricity grid decarbonises.
The main scrap-based production route is the electric arc furnace (EAF). If we compare the raw materials,
energy and emissions from the scrap-based route with a primary steelmaking process, such as a blast
furnace with a basic oxygen furnace (BF-BOF), we can clearly see the benefits of greater circularity in the
steel sector (see Figure 24).
The increasing availability of scrap plays an important role in reducing the amount of energy used for
steelmaking, as this can be added to EAF as well as BF-BOF routes to varying extents. We assume on the
basis of our analysis, that scrap use in the BF-BOF route will increase from an average of around 10% today
to 20–25% by 2050, which helps increase the efficiency of the process (See Technical Annex).
Designing steel products so that recycling is made easier, as well as building the appropriate recycling
infrastructure can be done immediately and the MoS’ Steel Scrap Recycling policy represents a positive
first step. In doing so, scrap use in the BF-BOF route and in EAFs can be increased to reduce energy
consumption and GHG emissions.
4 7 3
Raw materials (tl/tcs)
Emissions (tCO2/tcs)
Energy (Gcal/tcs)
6 2.5
3 5 -70% 2
-85% 4 -85%
2 1.5
3
2 1
1
1 0.5
0 0 0
BF-BOF EAF BF-BOF EAF BF-BOF EAF
Alongside private sector activity, to help drive initial large-scale demand for green products, governments
and public bodies should also commit to procuring environmentally sustainable products, such as ‘green’
steel. Infrastructure accounts for around 27% of steel demand in India, most of which is used in public
projects such as roads, bridges, railways, metros. Public Works Departments could help drive this initial
demand, providing a guaranteed market for domestic green steel producers.
In 2021, the Government of India announced its co-leadership of a new Industrial Deep Decarbonisation
Initiative under the Clean Energy Ministerial, which seeks to create markets for industrial products through
procurement initiatives. This is supported through other major economies that are also looking to use
public procurement as a tool to create lead markets for green steel, such as Canada and the USA.
The Confederation of Indian Industry (CII) is working in partnership with producers such as Tata Steel
to apply its GreenPro framework to products such as steel rebar. At the global level, an alliance of steel
producers and users are developing ‘ResponsibleSteel’ standards, where a reduction in GHG emissions is
one requirement for responsible production.
In March 2021, ArcelorMittal also announced the launch of its first three XCarb™ initiatives, as part of
its 2050 net zero commitment. These initiatives include green steel certificates, recycled and renewably
produced products and an innovation fund to help introduce new low emission technologies (ArcelorMittal,
2021).
To implement, the Ministry of Steel could work through the Bureau of Indian Standards (BIS) to develop
green product standards, similar to the existing process with steel quality controls. For example, in
March 2020, MoS introduced a Quality Control Order that prohibits the import, sale and distribution of
substandard steel and steel products to help improve the availability of quality steel for the construction,
infrastructure, and automotive sectors. A similar approach could be taken with green steel standards, to
gradually decrease the GHG intensity of steel.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 39 |
Going forward, these funds need to increase in size to support medium to large-scale demonstration plants
focused on new ‘breakthrough’ clean production technologies. This will help familiarize the sector with
new technology, bring forward the date at which technology can scale-up, and signal a serious intention
for deep decarbonisation.
Given the high risk associated with demonstrating new, more expensive technologies in the steel sector, it
will be necessary to establish public-private partnerships between GoI, Indian steel companies, technology
providers, academia, and international finance.
Figure 25 illustrates two potential transition pathways for the leading technologies discussed earlier.
For the hydrogen route, gas-based capacity could be built in the 2020s, using natural gas or coal-based
syngas, which is more readily available. This could then be switched to low carbon hydrogen over time,
reducing emissions without a significant change in the infrastructure. Alternatively, steel producers could
establish smelting reduction facilities, such as HIsarna, over the coming decades, which could then be
retrofit with CCUS technology to reduce emissions. CCUS technology is relatively underdeveloped in India,
with only a few, small-scale projects currently underway in the oil and gas and fertilizer sectors.
| 40 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
CH4 H2 H2
Hydrogen
Natural gas / Syngas Begin blending of low Shift to >90% hydrogen use, produced
route
CO2 CO2
CCUS
route
Smelting reduction Carbon capture, use/ Increase capture rate to >90%, making
facility e.g. Hlsarna storage technology use of excess carbon where possible
Net zero
Taking the steps over the 2020s will put the Indian steel sector in a strong position to then start to
rapidly decarbonize its production post-2030. This will require more significant, coordinated policies and
measures to incentivize a mass-market switch that will put the entire sector on a net zero trajectory, not
just the most progressive companies.
This could include direct financial support from the GoI, via existing bodies such as the Ministry of Steel
(for example through Carbon Contracts for Difference, which are being explored in Germany), although this
is likely to be insufficient given limited domestic resources. As renewable electricity projects become ‘self-
financing’ in India, thanks in large part to a dramatic reduction in technology costs, as well as a growing
familiarity with such projects among private sector lenders, greater focus should be given to the heavy
industry sectors, such as steel. Organisations such as the World Bank, the Asian Development Bank and
the Climate Investment Funds should increasingly look to support these heavy industry projects, either
through support to reduce costs of capital, or through direct grants.
Alongside direct financial support from multilateral development banks, it will be important to help
facilitate active technology partnerships. This can include partnerships between companies, as well
as partnerships between India and other governments (for example, the U.S. - India Climate and Clean
Energy Agenda 2030 Partnership).
x
n ta r
rbo e
+ ca e bord
t th
a 500
250
500
0
Cheaper imports
250 without carbon tax
higher steel carbon intensity. This may dissuade Indian steel importers from importing and will help in
switching to domestic. Additional revenue, that may be collected as import duty, based on carbon content
of imported steel, can be considered for supporting India’s greening of steel. This may enhance export
competitiveness of India’s steel sector particularly when it comes to our export to developed nations like
the EU. However such strategies will require better understanding of the extent of CBAM and its ability to
shift demand for steel from within India and the adequacy of import duty revenue, thus generated from
CBAM, in subsidizing the greening of India’s steel industry.
For a net zero by 2070 scenario, it is assumed that largely gas based direct reduction plants are installed
during the 2020s, primarily using natural gas. When low-cost hydrogen is available, these plants can
switch over to hydrogen. From 2030 onwards, it is assumed that further direct reduction plants using high
shares of green hydrogen from the beginning will be constructed.
The existing blast furnaces would need to be steadily decommissioned as they reach the end of their
economic life. This might require consideration for some form of fiscal/ financial packages to facilitate
this process. By 2070, a limited number of blast furnaces would remain, and those that do would be
fitted with carbon capture technology. Coal-based direct reduction units have a shorter lifetime and higher
emissions versus blast furnaces and so these units would need to be phased out before 2050, with natural
gas and hydrogen based direct reduction units being deployed in their place.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 43 |
7
CONCLUSIONS
| 44 | ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA
Conclusions
The Indian steel sector is on the cusp of a significant transformation. As explored in this report, India is
well positioned to reap many of the benefits associated with a competitive, digital, and decarbonised
sector, making use of domestic resources and skills.
Nonetheless, there are significant risks of not rising to this challenge. The global steel sector is shifting
rapidly, with governments, the finance sector, and steel buyers all moving fast to clean up their act. India
currently operates one of the highest polluting steel sectors and so has further to go than many others,
whilst growing production at the same time.
Whilst challenging, this report sets out that such a pathway is possible and desirable. Through rapidly
scaling-up renewable electricity and green hydrogen production, in particular, the steel sector can shift
away from imported fossil fuels, putting the sector on a path to a net zero, self-reliant future.
ACHIEVING GREEN STEEL: ROADMAP TO A NET ZERO STEEL SECTOR IN INDIA | 45 |
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