Indian steel industry leads the world in CO2 emissions

India’s steel industry remains the world’s dirtiest in terms of CO2 emissions. According to a 2022 study by the European Commission, steel production in the country generates about 2.6 tons of CO2 per ton of finished steel (tcs), which is 20-25% higher than China, the world’s second largest emitter. In 2023, the average global emissions intensity was 1.92 tons of CO2/tcs, writes Mritunjaya Rao Nandagiri, a consultant at I&S.

India ranks second in the list of steel exporters to the EU, behind only South Korea. However, its emissions are much higher: 2.55 tons of CO2/tcs versus 1.6 tons in South Korea. In comparison, Turkey has the lowest level among the main suppliers – 1.0 tons of CO2/tcs.

The main reason for the high emissions is the dominance of the coal-based DRI (direct reduced iron) process in India, which emits 3.0-3.1 tons of CO2 per ton. By comparison, the use of electric arc furnaces (EAFs) with scrap provides significantly lower emissions – 0.7 tons of CO2. However, the shortage of scrap and limited availability of natural gas force Indian companies to continue to operate on coal.

India’s largest steel companies, such as Tata Steel, JSW Steel and SAIL, have already set ambitious emission reduction targets by 2030. In particular, Tata Steel aims to achieve 1.85 tons of CO2/tcs, while JSW Steel – 1.95. However, even these targets remain higher than the global average.

According to Mritunjaya Rao Nandagiri, to reduce emissions, Indian steelmakers should consider the following measures: reducing coke consumption in blast furnaces, intensifying scrap recycling, and improving ore quality through additional concentration plants.

However, these steps will be insufficient without financial support from the government. While the EU, the US and Canada are actively supporting their industries with subsidies, Indian producers face financial difficulties in implementing green technologies.

A key way forward for India could be the transition to hydrogen technologies using renewable energy, but this methodology remains expensive and inaccessible for mass adoption.

As GMK Center repored earlier, India needs to invest $120 billion to reach its target steel production of 300 million tons by 2030. In 2023, the country’s steelmakers increased steel production by 11.8% compared to 2022, to 140.2 million tons.