Annapurna
The Steel Industry contributes majorly to the Indian or any country’s economy, and with its vast scale comes the issue of excessive carbon emissions, primarily due to mining and high energy consumption. India stands at the centre of it as the world’s second-largest producer of steel, with its production only expanding rapidly to triple by 2050.
However, the steel industry falls in the league of cement and petrochemicals as one of the top three industrial sectors deemed hardest to decarbonize, as it is responsible for about 7%-10% global emissions and 12% in India. As a result, decarbonisation seeks efforts for the transition to green energy in steel making.
Decarbonization of steel in India require research and development in various areas, particularly on pilots using green energies like renewable electricity, biochar, hydrogen and other alternatives to reduce its major reliance on the coal/coke based technologies.
Parth Kumar is the Programme Manager, Sustainable Industrialization Unit at the Centre for Science and Environment, New Delhi. He holds years of experience and expertise in environmental research and policy, and his work at CSE has been in the area of decarbonisation, air pollution and resource efficiency in the industrial sector… He is a recipient of the Holcim Sustainability Award in 2018 and the DAAD International Prize for Outstanding Achievements in 2016 in Hamburg, Germany and has spent the better part of his career asking hard questions around carbon emissions and decarbonization in industrial and specifically hard to abate sectors. The question still continues to drive his work, and at the centre of it, he emphasizes on the significance of covering the transition story of steel in India
Q1: India’s steel plants currently emit more CO₂ per tonne than the global average. Even with the National Steel Policy 2025 target of reducing emissions intensity to about 2 tonnes CO₂ per tonne by 2035-36 while doubling capacity, do experts worry this may not be enough to meaningfully slow global warming from the steel sector?
Parth Kumar:
India’s emissions intensity in steel production remains significantly higher than the global average, around 2.5 tonnes of CO₂ per tonne of crude steel compared to about 1.8–1.9 globally. While the government’s targets to bring this down to about 2.2 by 2030 and 2 by 2035–36 are a step forward, but the possibility of its achievement is debateable especially keeping in mind the scale of planned capacity expansion through carbon intensive routes.
Achieving deeper reductions will require tackling structural constraints. Low-carbon pathways such as hydrogen-based DRI and scrap-based EAF are still constrained by factors like the high cost of green hydrogen and limited domestic scrap availability. While pilot initiatives are underway and show promise, scaling these solutions will take time and supportive ecosystem development.
India’s steel sector is also highly heterogeneous, with a majority share of production coming from relatively emission-intensive processes like blast furnace -basic oxygen furnace route and coal based direct reduced iron – induction furnace/ electric arc furnace route. Transitioning these will be critical and will require a strong policy level signalling, a greater number of commercially scalable pilots and accelerated and accessible policy and economic support ecosystem.
Going forward, the challenge is not just reducing intensity, but ensuring that capacity growth does not lock in high-emission pathways. This makes it essential to align new investments with cleaner technologies while accelerating the ecosystem for low-carbon solutions.
Q2: Building on that, green hydrogen is often discussed as a future solution, but it remains very costly and not widely available. In your view, what are the biggest practical hurdles beyond cost for scaling up hydrogen use in Indian steel plants right now? And how long until it could realistically replace traditional systems?
Also, blast furnaces are high-value, long-life investments. Many new steel projects and expansions are still based on traditional coal-based methods. Does this risk creating “stranded assets” plants that become uneconomic or have to close early due to future climate rules? How should policymakers balance short-term growth against longer-term climate and economic risks?
Parth Kumar:
Beyond cost, the key challenges with green hydrogen are infrastructure and system readiness. This includes storage and transport constraints, integration with existing steel processes, and the need for large-scale renewable energy supply. Hydrogen-based steelmaking also requires adjustments in plant design and operations, which cannot be done overnight. While pilot projects are underway, commercial-scale adoption is likely to take time, possibly over the next decade or more, depending on how quickly costs fall and infrastructure develops.
On capacity expansion, there is a need to carefully balance near-term growth with long-term transition goals. Steel plants are long-lived assets, so choices made today will shape emissions for decades. If new capacities rely heavily on conventional technologies, there is a risk of carbon lock-in, which could make future transitions more complex and costly.
At the same time, the risk of stranded assets will depend on how global and domestic markets evolve, particularly demand for low-carbon steel and emerging regulations. This makes early alignment of new investments with cleaner pathways important, along with policy signals that support gradual but clear transition.
Q3: India has green steel roadmap now. What do you see as the biggest gap between these plans on paper and what’s actually happening on the ground in steel plants, especially when they are working around emission reduction targets or launching forces related to green steel? Also exports and cleaner steel often costs more to produce, so do you think that Indian steel companies could lose competitiveness in exports, especially with rules like the EU’s carbon border tax, unless the government provides stronger financial support or subsidies for the transition?
Parth Kumar:
There is a visible intent to move towards low carbon steel, and companies, especially those with export exposure, are beginning to adapt to evolving global requirements. However, the transition is still at an early stage, with most efforts focused on pilots and incremental improvements.
A key gap lies in demand creation for low-carbon steel. Without clear procurement standards or market incentives, adoption remains limited. Clear policy, mandates and standards for green procurement are awaited. At the same time, the delay in target setting for the steel sector under the upcoming domestic carbon markets is also adding to the uncertainty.
On competitiveness, cleaner steel does come at a higher cost today. The way in which the world is evolving, more unilateral regulations like carbon border taxes are likely to come up in the coming times. This could pose challenges in export markets with stricter carbon regulations. Therefore, surely Indian companies that have an export portfolio are likely to face these challenges in the coming years. However, it also presents an opportunity, early movers could gain a competitive edge as global markets increasingly value low-carbon products, but for that to happen, policy support, accessible finance and clear market signals would be essential.
Q4: If we look at it in the Indian context, in states like Odisha and Jharkhand, steel and mining are closely linked, providing jobs but also affecting forests, water, and air quality. How should decarbonization plans balance the need to cut emissions with protecting livelihoods in mining areas and avoiding new environmental damage from things like ore processing? Also, when we talk about a “just transition,” it means supporting workers and communities if coal use in steel declines. What specific steps, like retraining, new jobs in green industries, or support for affected families, do you think are urgently needed but still missing from current policies?
Parth Kumar:
Unlike countries like the UK, in India, the impact on jobs from steel decarbonisation is still limited, as large-scale technological shifts have not yet taken place. This provides an important window to plan ahead and invest in reskilling.
The larger transition challenge is likely to be in mining-dependent regions, where local economies are closely tied to coal and iron ore. Addressing this will require a broader approach, diversifying economic opportunities, investing in new industries, and strengthening local skill ecosystems.
At the same time, existing regulatory processes such as environmental impact assessments need to be strengthened firstly and implemented effectively to ensure that growth and environmental safeguards are balanced.
Q4: One last but subjective question: If you could ask the Ministry of Steel or steel companies one tough follow-up question about their decarbonization efforts, what would it be, and why hasn’t it been addressed properly yet?
Parth Kumar: One of the biggest follow-ups should be that we need to be more ambitious and send stronger policy signals to the sector if we truly want to decarbonise. As I said earlier, the future capacity expansion has to be handled carefully. We cannot keep building more carbon-intensive technology; instead, we should decarbonise what already exists and accelerate research and development and invest heavily on clean technology and fuel options so that they can be scaled quickly, resulting in lesser carbon lock-in in the future. But none of this will happen at the pace required unless the policy signalling is strong and effective. Even after several initiatives in the Indian steel sector, the current planned capacity expansion of the steel sector through carbon-intensive technologies is a clear sign of insufficient policy signalling and support. That would be my take.
(Author is an Independent Journalist | Media Professional dedicated to analysing industrial change and advancing environmental sustainability through my work. The views, opinions and conclusions expressed in this article are those of the author and aren’t necessarily in accord with the views of “Kashmir Horizon”)
