Green Steel Can Shape India’s Climate Goals Trajectory

As India revises its Nationally Determined Contributions (NDCs) for COP30, the steel sector emerges as the critical frontier for economy-wide decarbonisation. 

• Balancing a tripled production target with net-zero commitments, India is pioneering frameworks like the Green Steel Taxonomy to transform industrial growth into sustainable, global leadership. 

Green Steel- India’s Decarbonisation Frontier

• The Steel Imperative: Steel is the “backbone” of India’s infrastructure. Production must triple from 125 MT to 400 MT by 2050 to sustain economic growth.
• The Climate Paradox: The sector contributes 12% of India’s CO₂ emissions, primarily due to the Blast Furnace-Basic Oxygen Furnace (BF-BOF) route which relies heavily on coal.
• Global Push Factors: Transition is mandatory due to the EU’s Carbon Border Adjustment Mechanism (CBAM), which threatens exports with steep carbon taxes for “carbon-heavy” products.

Policy Landscape- First-Mover Advantage

• World-First Taxonomy: In December 2024, India became the first country to notify a Green Steel Taxonomy, defining “greenness” based on emission intensity.
• Star Rating System: Steel is classified by its CO₂ equivalent per tonne of finished steel (tfs):
  • 5-Star: < 1.6 tCO₂e/tfs.
  • 4-Star: 1.6 – 2.0 tCO₂e/tfs.
  • 3-Star: 2.0 – 2.2 tCO₂e/tfs.
• Compliance Framework: The Carbon Credit Trading Scheme (CCTS) has set mandatory intensity targets for 253 steel units, transitioning them from efficiency-based metrics to absolute emission benchmarks.

Barriers & Transition Levers

• Technological Risks: Aversion to “Carbon Lock-in”—investing in traditional technologies today risks billions in “stranded assets” that will be uncompetitive by mid-century.
• Resource Bottlenecks: High cost of Green Hydrogen, limited scrap availability (informal market), and high capital intensity (30–50% higher for low-carbon plants).
• Transition Fuels: The need for prioritized Natural Gas allocation as a “bridge fuel” before full-scale hydrogen integration.

Recommendations for a “Viksit Bharat”

• Demand Aggregation: Implement Green Public Procurement (GPP) (targeting up to 25% of government steel needs) to provide a guaranteed market for low-carbon producers.
• Financial De-risking: Utilize Transition Finance, Green Bonds, and Contracts for Difference (CfD) to bridge the “green premium” (the extra cost of sustainable production).
• Inclusive Transition: Targeted fiscal and technical support for MSME steel manufacturers to ensure an equitable shift.

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Conclusion

Decarbonising steel is a strategic imperative for India’s global competitiveness and climate resilience. By synchronizing decisive corporate action with a robust carbon-pricing regime and public procurement mandates, India can lead the Global South in shifting from carbon-heavy development to becoming a green industrial powerhouse.

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