India's steel industry is crucial to its economic development, as it contributes about 2% to the national GDP and engages millions of people. It, however, accounts for approximately 12% of the country's total greenhouse gas emissions, which means there is a lot of work ahead in meeting India's vision of net-zero emissions by 2070. For that reason, decarbonization in the steel sector is the most important task. The initiatives towards better sustainability and emission reduction are the critical needs of this industry as it is associated with infrastructure development and manufacturing. 

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Current State of India's Steel Industry

Being one of the largest emitters of greenhouse gases, steel from India contributes to a chunk of 12% of total Indian emissions. With expanded production mainly through the carbon-intensive BF-BOF route, the emission is only supposed to increase till 2050. Being the most prominent user of coal-based Direct Reduced Iron (DRI) processes due to easily accessible domestic coal, India becomes that much more challenging with this process of decarbonization in steel.

The government has set a goal of increasing the production capacity of steel to 300 million tons by 2030 to meet the increasing demand. If this growth is left unchecked, it will contribute further to emissions unless huge investments are made in green steel production in India and energy sources.

Also Read: How to Set Up an Iron and Steel Manufacturing Unit in India?

Decarbonization Pathways for India’s Steel Industry

• Electrification: Electrification means shifting fossil fuel-based processes to use electric arc furnaces operated by renewable energy sources. Substantial reductions in greenhouse gases can be achieved. Because EAFs melt either scrap steel or directly reduced iron using electricity, they use much less carbon than more traditional blast furnaces that utilize coal. 
• Hydrogen Reduction: The use of green hydrogen as a reductant in iron ore reduction has been one of the more promising routes for the future. This process may offer carbon-free steel-making routes away from coal-based carbon emission processes Industry estimates indicate that green hydrogen will gain competitiveness over conventional methods once the prices come down to around $1-2 per kilogram and penalties on emissions due to carbon come into place by 2030.
• Carbon Capture and Storage (CCS): These CCS technologies can play a significant role in reducing emissions from the existing steel plants while switching over to greener methods. Carbon capture and storage can drastically reduce the carbon footprint of traditional methods by capturing the CO2 emissions produced during the steelmaking process and either storing them underground or utilizing them in other processes. Still, the implementation of CCS in India faces hurdles such as high costs and limited infrastructure for CO2 transport and storage.
• Recycling: Another efficient way through which emissions can be reduced is by maximizing the use of scrap metals in steel production. Recycling steel requires considerably less energy than producing fresh steel from iron ore, thus, overall emissions go down. The Indian government has initiated the Steel Scrap Recycling Policy, which works towards the achievement of this shift by promoting the efficient collection and processing of scrap metals to improve circular economy activities within the industry.

Also Read: How to Import Steel or Steel Products in India?

Challenges in Decarbonizing Steel Production

• High Price of Green Hydrogen: Green hydrogen is significant in carbon reduction in the production of steel but through the process of Direct Reduced Iron (DRI) production. The reason why many of the manufacturers of steel are reluctant to switch over to greener alternatives without returns and support policies is mainly due to this cost disparity.
• Limited Scrap Availability: India's underdeveloped scrap market makes the transition to Electric Arc Furnaces (EAF), which is critical in the use of scrap steel and the reduction of emissions, a challenge. Poor-quality scrap does not support the application of EAFs in India, it remains in a state of demand because infrastructure development continues to surge in India. 
• Demand for Green Steel: The Indian market is extremely price-sensitive, and, hence, green steel, which comes at a premium, will not be marketed without support or incentives from the legislature. This lack of consumer demand for more expensive green steel only makes it harder for manufacturers to want to invest in cleaner technologies. Government intervention is required to create a favourable environment to make the market receptive to green steel.
• Insufficient Carbon Capture Technology: Technologies under the category of Carbon Capture Utilization and Storage, or CCUS, help decrease emissions from traditional steel production processes. However, currently, they are expensive and energy-intensive. In addition, there is not sufficient infrastructure for storage of captured carbon which makes CCUS solutions economically unfeasible. 

Also Read: How to make Steel Production More Sustainable?

Recommendations for accelerating decarbonization

• Promote adoption of Green Hydrogen: Develop policies targeted towards a cost strategy for green hydrogen through domestic production plus financial incentives.
• Enhance Scrap Collection and Usage: Improving scrap collection systems as well as the scrappage policy is necessary for the optimal use of EAF.
• Encourage more Green Steel: Carbon border tariffs, compelled renewable energy use, and green financing structures such as green bonds may facilitate a shift toward greener production methods of steel.

Conclusion

India's steel industry is crucial for growth, accounting for about 12% of the nation's greenhouse gas emissions. Decarbonization at scale will be necessary to reach net zero by 2070. A major challenge is the high cost of green hydrogen, limited availability of scrap metal, and lack of appropriate carbon capture technology. Among the proposed pathways for decarbonization are electrification by using electric arc furnaces, hydrogen reduction, carbon capture and storage, and enhanced recycling. Recommendations include the promotion of green hydrogen adoption, better scrap collection, and encouragement of green steel production. A strategic roadmap is necessary for this important sector to transition to sustainable practices.