Green and bear it for a steely resolve

India is gearing up to fight at WTO over the EU‘s Carbon Border Adjustment Mechanism (CBAM), which mandates non-EU steel producers to report emissions. There are compelling reasons to address this issue at WTO. India is the only major steel producer experiencing robust growth, with an 8.5% increase in the first four months of 2024 compared to a year ago.Indian steel has a large carbon footprint. The sector accounts for about 12% of India’s CO2 emissions, with an emission intensity of 2.55 t of CO2 per tonne of crude steel, compared to the global average emission intensity of 1.85 tCO2/tcs. Decarbonising is crucial to meet India’s climate targets and grow its export market. Earlier this year, the steel ministry began formulating a green steel policy.

A task force has been set up to explore using biomass as an alternative in blast furnaces to reduce emissions. The ministry is also betting big on green hydrogen. But that’s for post-2030. Major steel producers have decarbonisation plans, but these rely on developing technologies such as carbon capture, utilisation and storage, and green hydrogen.

Meanwhile, new capacity, mostly carbon-intensive, is being added to achieve the 300 mn-t goal by 2030. These could become stranded assets. GoI must nudge the industry to go green.

India has additional options, such as a green steel procurement policy and targets to encourage market creation and demand aggregation, supporting R&D to advance breakthrough tech and solutions, promoting alternative emissions mitigation actions, and framing mechanisms and frameworks for financing the transition, including mandatory compliance with carbon emissions trading. All these measures could ensure a fit-for-purpose steel sector.