Climate Change

Make steel future-ready

We can emit even less than what we do today; it needs planning, technology & funds

By Sunita Narain
Published: Friday 14 October 2022

As our fractious and dysfunctional world gets ready to go to the 27th meeting of the parties to the climate convention (COP27) and as extreme weather events spiral out of control and take down lives and properties, it is clear that we need to act urgently.

It is equally clear that this “action” is not happening, certainly not at the scale or pace needed. But more on this another time.

This time I want to discuss the option for decarbonising India’s iron and steel sector. My colleagues at the Centre for Science and Environment (CSE) say it is possible to bring down carbon dioxide (CO2) emissions drastically by 2030 while tripling India’s output of steel; we can emit even less than what we do today. But it will need planning, technology and funds.

The fact is countries like India need to grow and develop, and this at a time when the world is running out of carbon budget to stay below the guardrail of 1.5 degree Celsius temperature rise. So, this growth can, and must, be low in carbon.

How do we ensure the double benefits of reduced emissions and growth?

Our report Decarbonising India: Iron and steel sector shows it is possible. Globally, the iron and steel sector is a major contributor to emissions — some 7 per cent of the total greenhouse gas emissions.

In India, the sector’s share is 5 per cent, as per the latest inventory available for 2016. India is second in terms of global production of iron and steel. But India’s production pales in comparison with the first producer.

China produces 10 times more than India; in 2019, it produced 1,050 million tonnes of crude steel, against India’s 100 million tonnes. Therefore, India will need to increase its production — there is a huge unmet infrastructure demand in the country.

Our per capita steel consumption, even in 2030, when official estimates forecast expansion to 300 million tonnes capacity and production to 255 million tonnes, will be only 160 kg per capita.

In contrast, global per capita consumption of steel today is 229 kg. Our need to increase production is a no-brainer.

The only question is what needs to be done to reduce emissions of CO2 in this sector? What must India do? What can the world do to ensure this transition?

The emission story of iron and steel is like that of most other industries. The fuel — coal, gas or clean electricity — that fires its furnaces is what then adds to emissions, but with one crucial difference. The manufacturing process is a determinant of the amount of CO2 the industrial unit will produce.

When iron is produced using a blast furnace and then steel through a basic oxygen furnace (BF-BOF) route, CO2-producing coal is needed as a reducing agent to turn the ore into metal. This makes the sector hard to decarbonise; roughly half of India’s iron and steel is produced through this route.

The other way to manufacture iron is direct reduced iron (DRI), or sponge iron, where iron ore is not liquefied but iron is extracted using reducing agents, coal or gas, and then to produce steel through electric-arc or induction furnace. This production process is easier to decarbonise, as coal can be replaced by natural gas. Also in this process steel scrap can replace iron ore completely.

In BF-BOF the use of steel scrap is limited to roughly 30 per cent. However, in India, iron and steel manufactured using DRI is far more polluting because it is coal-based. Since sponge iron plants operate largely as the small and medium sector there is no impetus to improve their emission profile.

This is where the opportunity lies; the government should work on a package deal that involves cleaner fuel like gas and improves the circularity of the recycled steel business by promoting optimum usage of steel scrap as a raw material.

The CSE roadmap focusses on the strategies for both manufacturing routes. In the case of BF-BOF, our low-carbon trajectory improves on the voluntary emission targets of top players by recommending the use of natural-gas injection or hydrogen to reduce coal and to increase the amount of recycled steel in production to its optimum of 30 per cent.

In addition, this industry would have to implement carbon capture and utilisation, as coal-based emissions would have to be abated. These high-end technology interventions will need international finance, which should be secured by setting tough emission targets for 2030 — from 2.2 tonnes of CO2 for every tonne of iron and steel, to less than 1.5 tonnes, which is the global best.

Three established companies, Tata Steel, SAIL and JSW (Jindal), which account for 45 per cent of the country’s production in 2020-21, contributed 41-51 per cent of CO2 emissions — and this makes the financial infusion also possible for manufacture of low-carbon steel.

The bottom line is it is possible to bend the CO2 curve even for a sector like iron and steel. Countries like India can develop while drastically reducing their emissions. The only question is if the rich world will accept the imperative of climate justice and provide the funds for the technology transformation necessary for a future-ready industry.

This is what COP27 — the 27th conference of parties to the United Nations Framework Convention on Climate Change — should discuss.

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