India plans to roll out a ₹5,000-crore programme to encourage steel producers to cut emissions, steel secretary Sandeep Poundrik said on Wednesday.
The plan under the ‘National Mission of Sustainable Steel’ would target small firms in particular, which account for almost half of the country’s steel output, he added.
The programme is part of the government’s efforts to reduce the environmental impact of its hard-to-abate steel sector. The incentive would support India’s goal to reach net zero emissions by 2070 and aid trade with the EU, which through its border carbon tax is penalising emission-intensive imports.
The scheme will promote use of clean technologies and alternative materials. “Basically, this scheme is that you will get incentives depending on how much you reduce the emission...if you reduce your carbon emission compared with your last year,” he said.
According to official data, the domestic steel sector accounts for 12 per cent of India’s greenhouse gas emissions with an emission intensity of 2.55 tonnes CO2 per tonne of crude steel, higher than the global average of 1.9 tonnes CO2.
The initiative will proportionately reward different levels of decarbonisation, and will focus on secondary plants producing semi-refined, refined or finished products, Poundrik informed.
Last year, the steel ministry introduced the definition of green steel with an aim to encourage the industry to bring down carbon emissions.
Under the ministry’s taxonomy, green steel shall be defined in terms of percentage greenness of steel, which is produced from the steel plant with CO2 equivalent emission intensity of less than 2.2 tonnes of CO2 per tonne of finished steel.
If 1.6 tonne of CO2 or less is emitted in the production of 1 tonne of finished steel, it will be considered 5-star green-rated steel.
The effort to rein in pollution assumes significance as India plans to build steel capacity through coal fired blast furnace route even as many units in the western hemisphere are replacing them with electric arc furnaces which have lower emission.
The steel secretary said India’s consumption will be somewhere between 225 to 240 million tonnes by the end of this decade. To cater to that consumption, the country will need about 300 mt capacity.
“India last year crossed the threshold of 100 kilograms per capita consumption. Now, that’s an interesting landmark,” he said.
Even though the steel mills are predominantly domestic focused, export remains a key enabler to sell additional capacity. However, with Europe’s Carbon Border Adjustment Mechanism (CBAM) to be implemented soon, Indian producers may struggle to sell to Europe.