A clean steel sector in eastern India can become essential for the country's transition to green steel
The steel industry is very important for the Indian economy and has been the backbone of the country’s industrial development.
At present, the iron and steel sectors are highly energy intensive and big on emissions. As decarbonisation of the power and transport sector moves forward in leaps and bounds, the iron and steel, cement and chemical industries have started to focus their attention on greening the sector.
At present, the country’s iron and steel sector is financially weak. More than 80 per cent of the country’s reserves are in the states of Odisha, Jharkhand, West Bengal, Chhattisgarh and the northern regions of Andhra Pradesh.
Western states Gujarat, Maharashtra and Karnataka have made good use of the available non-conventional sources of energy in the region. This can be further developed once the greening of the grid happens.
Some states where steel is transported from eastern India have large installed renewable energy capacities. Some of these states may also have adundant mineral resources that can be used to manufacture steel domestically, and this may reduce demand from steel from other states.
Thus, it is important to make accurate projection of steel demand in these states to ensure only necessary volume is produced to lessen fossil-fuel consumption.
There is a necessity to find out the future steel-making needs when it comes to transporting iron across the regions which are abundant in terms of mineral reserves as well as renewable sources of energy. A clean steel sector in eastern India can become an essential part of the green energy transition happening across the country.
The expense head for steel production in the country is dependent on a number of variables, as explained in the following table.
Expense heads for steel production in India
Item |
Cost ($/ton) |
Logistics and Infrastructure |
25-30 |
Power |
8-12 |
Import duty on coal |
5-7 |
GST Compensation Cess |
2-4 |
Taxes and duties on iron ore |
8-12 |
Finance |
30-35 |
Total cost disadvantage |
80-100 |
Source: Niti Aayog, 2016
In order to decarbonise the iron and steel sector, the primary emphasis through technological interventions would be on substituting the primary production processes with cleaner alternatives. The three main ways to produce steel from iron through clean technologies are :
These technologies are distinct from each other. Their capacity to reduce emissions and linking with the country’s existing infrastructure depend on the scenario in the country.
As countries ramp up their emission reduction policies, it is necessary to have an early intervention for the steel sector to remain competitive. Some of the interventions to be explored are:
With the industry rapidly decarbonising, it is important to remove old and polluting plant facilities, which have reached the end of their life. Some of the most polluting steel facilities are currently being operated in India and there is a long road ahead to decarbonise the sector.
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