CSE unveils roadmap to bring down carbon emissions from India’s iron and steel industry

Decarbonizing India: Iron and Steel Sector, CSE’s new assessment report, shows how it is possible for this industry to grow and prosper – and emit less at the same time 

In a business-as-usual scenario, GHG emissions from the sector are estimated to grow 2.5 times (up to 659 million tonne or MT) by 2030 compared to 2020-21 (271 MT). CSE’s recommendations can reduce these emissions by 64 to 79 per cent (419 to 519 MT) by 2030, even after tripling the production 

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New Delhi, October 20, 2022: “Our new analysis shows it is possible to bring down carbon dioxide (CO₂) emissions from our iron and steel sector drastically by 2030, while tripling India’s output of steel.We can emit even less than what we do today – but all this will need planning, technology and funds,” says SunitaNarain, director general, Centre for Science and Environment (CSE), referring to CSE’s recent assessment report on the emissions footprints of India’s iron and steel sector and how it can be ‘decarbonised’. 

The iron and steel sector is a hard-to-abate sector in terms of greenhouse gas (GHG) emissions; at the same time, it is a critical contributor to the economic development of the country.Globally, the sector accounts for some 7 per cent of total greenhouse gas emissions; in India, the sector’s share is 5 per cent (as per the latest inventory available for 2016). 

The new CSE report – Decarbonizing India: Iron and Steel Sector– gives a detailed insight into GHG emissions from the sector and its future emission scenarios for 2030. The analysis assumes significance with the 27th UN Climate Conference of Parties scheduled to begin in Egypt in November. Says Narain: “Countries like India need to grow and develop, and this at a time when the world is running out of carbon budget to stay below the guardrail of 1.5°C temperature rise. Hence, this growth has to be low in carbon. It must be as green as it can be. How do we ensure the double benefits of reduced emissions and growth? Our new report shows us the way.” 

In the iron and steel sector, the manufacturing process determines the amount of CO₂an industrial unit will produce. Coal is key to the production of iron in a blast furnace,and well as for making steel through a basic oxygen furnace (BF-BOF). “This makes the sector hard to decarbonise -- roughly half of India’s iron and steel is produced through this route,” says the CSE research. 

The other way to manufacture iron is the direct reduced iron (DRI) or sponge iron method. In this, iron is extracted using reducing agents like coal or gas, and steel is produced thereafter through an electric-arc or induction furnace. Says Parth Kumar, programme manager, Industrial Pollution Unit, CSE: “This production process is easier to decarbonise as coal can be replaced by natural gas; also, steel scrap can replace iron ore completely.” 

In India, iron and steel manufactured using DRI is far more polluting because it is coal-based. Since sponge iron plants operate largely in the small and medium sectors, there is no impetus to improve their emissions profile. Says Narain: “This is where the opportunity lies; the government should work on a package that involves a cleaner fuel like gas and improves the circularity of the recycled steel business by promoting optimum usage of steel scrap as a raw material.” 

The CSE assessment has laid down some calculations based on four scenarios:

• Business as usual (BAU): Based on production in 2030 and the technologies being used currently, GHG emissions will grow 2.5 times by 2030 compared to 2020-21.
• Low-carbon growth pathway: Based on emission targets set by the National Steel Policy 2017, a reduction of 12.5 per cent (82 million tonne or MT) from the BAU scenario is possible.
• Improved low-carbon growth pathway: Based on voluntary targets by large steel companies, a reduction of 22.5 percent (148 MT) from the BAU scenario can be aimed for.
• Accelerated low-carbon growth pathway: CSE’s proposal, which is based on the best available technologies and options for decarbonisation of the sector, will lead to deeper emission reductionsof 419 to 519 MT by 2030.This means, says Kumar, that “emissions from the sector, even after doubling its production, would be lower than what is emitted today.“ 

The CSE roadmap

Narain says the CSE roadmap “focusses on strategies for both manufacturing routes”.

• CSE recommends a fuel change – in the case of BF-BOF, the use of natural-gas injection or hydrogen to reduce the use of coal is recommended, along with increasing the amount of recycled steel in production to its optimum of 30 per cent.
• The industry should implement carbon capture and utilization to bring down coal-based emissions.
• The switch to new fuels and technologies will require international finance. The government and steel industry should work towards a combined proposal for climate finance with touch targets for 2030 -- from 2.2 tonne of CO₂ for every tonne of iron and steel to less than 1.5 tonne. 

Three established companies – Tata Steel, SAIL and JSW – which accounted for 45 per cent of the country’s steel production in 2020-21, contributed almost 42 percent of the GHG emissions from the sector. Narain points out that this offers an “opportunity for financial infusion” for making low-carbon steel – envisaging a significant role for international climate finance. 

CSE’s research shows that the coal-based DRI-EAF/IF technology (mostly in use in the small- and medium-scale sectors) is contributing almost 51 per cent of the total GHG emissions from the sector in India as of 2020-21.Says Nivit Kumar Yadav, programme director, Industrial Pollution Unit, CSE: “The big opportunity is to re-work the DRI-EAF route. This would require working with the medium and small scale units so that they are enabled to either make the switch to a cleaner fuel (natural gas) or move towards 100 percent use of scrap material for steel production. This requires a steel mission for sponge-iron plants so that they are provided the assistance to make this transition.” 

“The bottom line,” says Narain,“is that it is possible to bend the CO₂ curve even for a sector like iron and steel. Countries like India can develop while drastically reducing their GHG emissions. The only question is if the rich world will accept the imperative of climate justice and provide the funds for the technology transformation necessary for a future-ready industry. This is what CoP27 should discuss.” 

For more on this or for interviews etc, please contact:

Sukanya Nair 
sukanya.nair@cseindia.org
8816818864