India’s transition to low-carbon steelmaking will remain a long-term and gradual process, constrained by high costs and technological limitations, according to a new report by Indian rating agency ICRA.
ICRA said Indian steelmakers currently emit an average of around 2.5 mt of CO₂ per mt of steel, about 12% higher than the global average for the blast furnace–basic oxygen furnace (BF-BOF) route.
Green Steel Taxonomy highlights decarbonisation gap
While the government’s recently introduced Green Steel Taxonomy under the National Mission on Green Steel is a positive step, ICRA noted that most Indian primary producers remain well above even the upper emission thresholds, highlighting a substantial decarbonisation gap.
Planned capacity additions of 80–85 million mt by 2030–31 are heavily skewed toward the coal-based BF-BOF route, whose share is expected to rise to around 51%, reinforcing high carbon intensity in the medium term.
Renewables and efficiency to drive near-term gains
ICRA estimates that improvements in operational efficiency and renewable energy adoption could reduce emission intensity by around 19% by 2029–30, lowering the sectoral average to about 2.0 mt CO₂ per mt.
Indian steelmakers have already announced around 9 GW of captive renewable power capacity, with green power integration expected to cut emissions by 13% for BF-BOF mills and up to 22% for DRI-based units. However, expansion of low-emission scrap-based EAF capacity remains constrained by limited scrap availability.
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