The 200 million tonne challenge

With the sector set to boom, India needs an action plan

Published: Monday 31 January 2011

The 200 million tonne challenge

imageIf one were to compare steel consumption figures, Indians lag far behind the rest of the world. Against the world average of 215 kg, per person steel consumption in India is just 50 kg a year. This consumption gap is likely to reduce in coming years. With rapid economic growth, steel requirement for housing, infrastructure and industry is poised to grow significantly.

Post liberalisation, steel production in India has grown seven to eight per cent annually. At this rate, which many experts consider sustainable, steel production will jump to 300 million tonnes (MT) in 2030 from 60 MT at present.

Traditionally, steel was manufactured from pig iron using blast furnace. India does not have reserves of coking coal, an important raw material for blast furnace route to make steel, and presently imports about 70 per cent of its coking coal requirement. This pushes up steel prices. Therefore, blast furnace route cannot meet the 300 MT target.

The other way to produce steel is through recycling used steel—the steel scrap route. Currently, about 15 per cent of steel production in India is from scrap. Due to limited scrap availability and ever increasing prices of imported scrap, not more than 10 per cent of steel can be produced from scrap by 2030.

The only option left is production of steel through DRI (sponge iron) route. DRI can be produced using gas but it is expensive and gas availability is not assured. So, the real option is to produce steel using non-coking coal, through DRI. In 2030, more than 60 per cent of the steel produced in India will come from coal-based sponge iron. This means more than 200 MT of sponge iron and hundreds of sponge iron factories. Hence, there is an urgent need to develop an action plan for the sector to contain its environmental impact.

Strengthen enforcement

It is evident that our current system of environmental monitoring and enforcement is not working. The problem with SPCBs is lack of capacity and accountability, non-transparent functioning and corruption. This has happened largely because of neglect and politicization of these institutions. The result is these institutions are incapable of taking strong enforcement actions. Industries pollute as there is no credible deterrence for non-compliance. The charade of issuing show cause and closure notices and imposing small bank guarantee is not going to solve the problem.

What we need is a system that ensures non-compliance is dealt with strictly. Increasing capacity, transparency and accountability of SPCBs is the first step in this direction. We then need to amend the Environment Protection Act to increase penalty amounts and set up a civil-administrative mechanism that can impose penalties without taking recourse to the lengthy legal process.

Bigger factories better

But this will not work unless we tighten technology and emission benchmarks for the sector. ‘Bigger the better’ is the mantra for the sector. Kilns with less than 200 TPD capacity cannot adopt cleaner technologies like an AFBC boiler that burns kiln gas to generate energy. Similarly, a boiler to burn char is not economically viable for smaller factories. These two technologies alone can reduce emissions significantly. It is for this reason that the government must devise a plan to phase out smaller kilns and immediately stop commissioning of kilns with less than 200 TPD capacity.

Material handling is a major source of fugitive dust and needs to be tackled by implementing mandatory technology and management norms. Ultimately, there has to be further technology development in this sector as the current technology, even with all refinements, is still polluting. We need a technology mission for the sponge iron sector.

With inputs from Jyotika Sood

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