New Delhi: “Our new analysis shows it is possible to bring down carbon dioxide emissions from our iron and steel sector drastically by 2030 while tripling India’s output of steel. We can emit even less than what we do today – but all this will need planning, technology and funds,” says Sunita Narain, director general of the Centre for Science and Environment, referring to CSE’s recent assessment report on the emissions footprints of India’s iron and steel sector and how it can be ‘decarbonized’.

The iron and steel sector is a hard-to-abate sector in terms of greenhouse gas emissions; at the same time, it is a critical contributor to the economic development of the country. Globally, the sector accounts for some seven per cent of total greenhouse gas emissions; in India, the sector’s share is five per cent.

The report – Decarbonizing India: Iron and Steel Sector – gives a detailed insight into GHG emissions from the sector and its future emission scenarios for 2030. The analysis assumes significance with the 27th UN Climate Conference of Parties scheduled to begin in Egypt in November. Says Narain: “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°C temperature rise. Hence, this growth has to be low in carbon. It must be as green as it can be. How do we ensure the double benefits of reduced emissions and growth? Our new report shows us the way.”

In the iron and steel sector, the manufacturing process determines the amount of CO2 an industrial unit will produce. Coal is key to the production of iron in a blast furnace, as well as for making steel through a basic oxygen furnace. “This makes the sector hard to decarbonise -- roughly half of India’s iron and steel is produced through this route,” says the CSE research.

The other way to manufacture iron is the direct reduced iron or sponge iron method. In this, iron is extracted using reducing agents like coal or gas, and steel is produced thereafter through an electric arc or induction furnace. Says Parth Kumar, programme manager of the Industrial Pollution Unit, CSE: “This production process is easier to decarbonise as coal can be replaced by natural gas; also, steel scrap can replace iron ore completely.”

In India, iron and steel manufactured using DRI are far more polluting because it is coal-based. Since sponge iron plants operate largely in the small and medium sectors, there is no impetus to improve their emissions profile. Says Narain: “This is where the opportunity lies; the government should work on a package that involves a 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 switch to new fuels and technologies will require international finance. The government and steel industry should work towards a combined proposal for climate finance with touch targets for 2030 -- from 2.2 tonnes of CO2 for every tonne of iron and steel to less than 1.5 tonnes.

Three established companies – Tata Steel, SAIL and JSW – which accounted for 45 per cent of the country’s steel production in 2020-21, contributed almost 42 per cent of the GHG emissions from the sector. Narain points out that this offers an “opportunity for financial infusion” for making low-carbon steel – envisaging a significant role in international climate finance.

CSE’s research shows that the coal-based DRI-EAF/IF the technology is contributing almost 51 per cent of the total GHG emissions from the sector in India as of 2020-21. Says Nivit Kumar Yadav, programme director, Industrial Pollution Unit, CSE: “The big opportunity is to re-work the DRI-EAF route. This would require working with the medium and small-scale units so that they are enabled to either make the switch to cleaner fuel or move towards 100 per cent use of scrap material for steel production. This requires a steel mission for sponge-iron plants so that they are provided with the assistance to make this transition.”

“The bottom line,” says Narain, “is that 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 GHG 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 should discuss.”