Context

• India stands at a pivotal moment where economic expansion and climate responsibility must advance together.
• The commitment to submit a more ambitious Nationally Determined Contribution (NDC) places pressure on the country to move beyond incremental change towards economy-wide
• Among all sectors, steel emerges as the most consequential. Its transformation will shape India’s ability to meet climate goals while sustaining development, competitiveness, and global leadership in sustainable industrialisation.

The Centrality of Steel to India’s Growth and Emissions Challenge

• Steel underpins India’s development ambitions, enabling infrastructure, urbanisation, and industrial growth.
• To unlock its full economic potential, steel production would need to more than triple from roughly 125 million tonnes annually to over 400 million tonnes by mid-century.
• This scale of expansion is unprecedented and poses a serious climate challenge. The steel sector currently contributes around 12% of national carbon emissions, primarily due to dependence on coal-based blast furnaces.
• India faces a dual imperative common to emerging economies: maintaining rapid growth while aligning with long-term climate targets.
• The central risk lies in locking in high-carbon infrastructure through present-day investments. Steel assets are long-lived, and continued reliance on conventional technologies could embed emissions for decades.
• Such lock-in would undermine climate commitments and weaken India’s long-term economic attractiveness in a world rapidly transitioning towards low-carbon production.

Global Signals and Competitive Pressures

• Global trends reinforce the urgency of transition. Major steel-producing economies are actively reducing emissions.
• China is expanding scrap-based secondary steelmaking and investing in green hydrogen to curb coal dependence.
• The European Union has advanced decarbonisation for decades and introduced the Carbon Border Adjustment Mechanism (CBAM), which penalises carbon-intensive imports.
• These developments signal that access to premium global markets will increasingly depend on demonstrable low-carbon production.
• Countries that fail to adapt face border charges, reputational risks, and declining export competitiveness.
• Conversely, early movers in green steel will secure a durable advantage. Delay, therefore, is no longer a neutral option but a strategic liability for India.

Industry Action: Progress and Its Limits

• India’s steel industry has begun responding. Leading producers are piloting low-emission technologies and diversifying energy sources.
• Initiatives include hydrogen injection trials, expanded renewable energy procurement, modernisation of facilities, and exploration of carbon capture.
• These efforts reflect growing leadership commitment and recognition of the climate challenge.
• However, pilot projects alone are insufficient. The sector must move swiftly towards demonstration plants and full-scale deployment of near-zero-emission technologies.
• Continued investment in business-as-usual blast furnace capacity risks diluting progress.
• Small and medium producers also need to adapt by adopting best available technologies and raw materials to improve carbon efficiency, ensuring that the transition remains equitable across the sector.

Policy Framework: Momentum Without Sufficient Incentives

• Policy direction has improved, but implementation gaps remain.
• The Greening Steel Roadmap outlines a practical transition pathway, while the Green Steel Taxonomy positions India as a global first-mover in defining low-carbon steel.
• Supporting initiatives such as the National Green Hydrogen Mission, expanded renewables, and emissions intensity targets under the Carbon Credit Trading Scheme indicate momentum.
• Yet, strong incentives to decisively shift investments away from coal-based technologies are still lacking.
• Without them, India risks continuing to add outdated infrastructure while others accelerate ahead.
• Key barriers include high hydrogen costs, limited industry-dedicated renewables, an underdeveloped scrap market, constrained natural gas availability, financing challenges, and workforce skill gaps.
• These challenges are significant but solvable, as demonstrated by India’s rapid renewable energy expansion over the past decade.

The Way Forward: Towards a Market-Aligned Transition

• Long-term investment requires clear and credible policy signals.
• Setting stringent short-, medium-, and long-term emission targets would allow firms to plan capital allocation with confidence.
• Early rollout of carbon pricing is essential to internalise emissions costs and distribute them across the value chain.
• Experience from Europe shows that near-zero steel technologies become viable only when carbon prices reach $90–$100 per tonne of CO₂.
• Additional measures include widespread adoption of the Green Steel Taxonomy, public procurement to create domestic demand, robust certification and labelling systems, and the creation of shared infrastructure hubs for energy, hydrogen, gas, and carbon transport.
• Given that low-carbon steelmaking has 30–50% higher capital intensity, targeted fiscal support—especially for smaller producers, is critical for a just transition.

Conclusion

• Green steel is no longer optional. It is central to India’s climate ambitions, industrial competitiveness, and global leadership.
• Having demonstrated capability in renewables and climate diplomacy, India now faces its next decisive test.
• By aligning bold corporate action with a coherent, market-oriented policy framework, the country can decarbonise steel, protect economic growth, and shape global standards for low-carbon industrialisation.