Evaluating Net-zero for the Indian Steel Industry
Council on Energy, Environment and Water (CEEW)
INTEGRATED | INTERNATIONAL | INDEPENDENT
The total cost to decarbonise the existing Indian steel plants will amount to USD 283 billion in capital expenses and USD 8.8 billion in additional annual operating costs, as per our first-of-its-kind analysis.
What will it take for India's steel industry to reach net zero?
Our analysis uses marginal abatement cost (MAC) curves to analyse the economics of various emissions mitigation options.
For each option, the MAC curve shows the cost of abating one tonne of CO? and the total amount of CO? that can be abated.
In 2021-22, the Indian steel industry emitted 297 mn tonnes of CO?. In 2018-19, the industry accounted for 12% of the country’s total emissions. This translates to an average emission intensity of 2.36 tCO?/tcs vs the world average of 1.89 tCO?/tcs.?
What are the mitigation options for the existing steel plants to achieve net zero?
??Emissions intensity of crude steel can be reduced by 28% through energy efficiency and renewable power generation
??The steel industry needs 5.9 GW of round-the-clock renewable energy (RE) capacity to transition to 100% clean electricity consumption.
??The use of alternative fuels such as biomass and natural gas can reduce emissions by only 6%.?
?? 56% of emissions from existing steel plants will rely on carbon capture utilisation and storage (CCUS) for abatement.
??If CCS costs USD 92/tCO? and CCU costs USD 468/tCO? (baseline), then near-net-zero steel will be 40–70% more expensive.
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??If a CCS of USD 50/tCO? is achievable, then the cost premium will reduce to 15–25% depending on the production route.
For the most common steelmaking process, blast furnace-basic oxygen furnace (BF-BOF), which was ~48% of India’s steel output in 2021–22, a 25% reduction in emission intensity is achievable without any increase in the production cost of steel.
This process has a number of energy efficiency technologies that have a negative MAC, indicating net savings.
?For steel produced through coal-based direct reduction of iron-induction furnaces (DRI-IF),? which is ~30% of the 2021–22 crude steel output, an emission intensity reduction of? 8% is achievable without increasing the production cost.
This route has very few energy efficiency/alternative fuel options and most mitigation measures have a net positive MAC.
To aid the steel industry in achieving net-zero, we recommend:
??setting MAC-based emission intensity targets for steel under the Indian Carbon Market
??providing long-term waivers on interstate open access charges for the steel industry to consume RE
??developing a policy for an effective CCUS ecosystem in India
??Read more in our latest study, ‘Evaluating Net-zero for the Indian Steel Industry: Marginal Abatement Cost Curves of Carbon Mitigation Technologies’??