CII’s GreenSteel 2024: An Overview
CII held the GreenSteel : Decarbonising the Indian Steel Industry event in Chhattisgarh earlier this week in July 2024. The objective of the event was to bring together industry stakeholders and explore how the Indian Steel Industry may achieve it Green Steel and Net Zero goals.
Some highlights:
Second Largest in the World:
India produced approximately 138 million tons of crude steel in 2023, making it the second largest crude steel producer. The installed capacity is at about 180 million tons.
The Indian steel industry contributes 2% to the Indian GDP. It is responsible for 11% of total national emissions.
In 2030-31, the Indian steel industry is expected to have 300 MT of capacity, demand at 255 MT and demand for finished steel at 230 MT. This will take the per capita steel consumption of an Indian to about 155 tons. In 2023-24, the per capita consumption for an Indian is about 87 tons. By contrast, the global average is about 219 tons and the Chinese per capita is about 640 tons.
Most Carbon Intensive industry in the World:
We had earlier seen than the Indian Cement industry is the most energy efficient in the world[1]. By contrast the Indian Steel industry is the most carbon intensive one in the world – consuming about 2.55 tons of CO2 to produce 1 ton of steel.
Main Driver for Green Steel in India:
India exports about 3-5 million tons of finished steel to the EU. Assuming $70/ton of carbon prices, Indian steel is likely to attract between $102 - $109 per ton of steel exports, between 2026 and 2030. The initial narrow scope of CBAM is on Scope 1 emissions. This will have a limited impact, but CBAM is expected to expand to include Scope 2 and later 3 emissions.
These laws are going to initiate from 1st January 2026.
This implies Indian steel to EU will be expensive vis-à-vis the local competition, leading to loss of revenue, reduced profitability and loss in market share.
The concern is doubly so because, the difference between Indian carbon emissions in steel making the global average is about 40%. Indian steel emits about 2.55 tons of Cos/ton of Steel. By contrast the global average emission is about 1.85 tons of CO2 per ton of steel.?
Opportunities to Achieve Net Zero:
In the opening remarks of the event, a broad decarbonization roadmap was presented. It showed the areas where the industry can reduce its emission intensity. It also explained why the Indian Steel industry is the most emission intensive.
This is largely because of heavy dependence on coal-based power and the actual manufacturing process depends on coke from Coal.
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The reduction in emission intensity can be achieved in multiple ways:
1.?????? Alternate Steel Making Technologies:
a.?????? India currently uses Blast Furnace-Basic Oxygen Furnace (BF-BOF) and Direct Reduced Iron (DRI) technique. This can be improved by adopting Electric Arc Furnace (EAF). But the transition to newer techniques implies additional investments. India has relatively recently installed new capacity with BF-BOF and DRI.
b.?????? EAF requires a steady flow of Scrap steel. While this may be possible with developed nations because of reliable supply of scrap, this may be some distance in the future for India.
2.?????? Electricity:
a.?????? Current sources of electricity are coal based. Renewable Energy such as Solar + Wind, offer alternate sources of electricity. There is a significant impact to be achieved in emissions reduction.
3.?????? Raw Materials:
a.?????? Higher grade of ore could lead to lower energy consumption, leading to lower emissions. This can either come from better ore or wider use of scrap steel.
b.?????? Coke is used for steel production. This can possibly be replaced by green hydrogen, leading to significant emission reductions. However, using Green H2 today is twice as expensive to produce steel.
4.?????? Carbon Storage (CCUS):
a.?????? Supposedly the manna for all the historical and future emissions, CCUS is attracting funds, time and hype. Essentially this means the emissions will be captured, utilised and/or stored, thereby reducing overall emissions of steel making. Some prototypes have been implemented globally. But this has worked in limited capacity and is yet to see success in market-scale deployment.
Conclusion:
Given these challenges and opportunities, the Indian Steel making has tough next few years. While the Government of India is fighting the CBAM as a disguised trade tariff, the steel industry is preparing to improve its emissions intensities and be more competitive.
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