India’s ongoing investments in new coal-based steelmaking, coupled with a young fleet of emissions-intensive blast furnaces that is set to have its operations extended, could jeopardise the country’s target of net zero by 2070 and risk saddling the country with upwards of $187 billion in stranded assets, finds a new report from Global Energy Monitor.
Data in the Global Steel Plant Tracker show that India has the world’s largest pipeline of steelmaking capacity in development, with projects that have been announced or are in the construction phases adding up to around 258 million tonnes per annum (mtpa).
Emissions-intensive basic oxygen furnaces account for over two-thirds of in-development capacity, while less emissions-intensive electric arc furnaces account for a marginal 13%.
In addition, over 75 mtpa of operating blast furnace capacity was developed in the last two decades meaning over 43 mtpa is due for relining before 2030. This relatively young fleet of blast furnaces increases the risk of emissions lock-in.
It poses a challenge to transitioning India’s coal-based steelmaking fleet, as many of these units may still be recovering initial investment costs.
The widespread adoption of coal as the reducing agent in direct reduced iron production is another barrier to cutting emissions in India’s steel sector. India already hosts one of the world’s most emissions-intensive steel sectors.
Over 87% of India’s operating ironmaking capacity and 90% of capacity in development is dependent on coal. The steel industry in India currently accounts for over 240 million tonnes of CO2 emissions annually, about 12% of the country’s total carbon emissions, and that number is expected to double by 2030.
While India’s short-term solutions to reduce emissions without significant modifications to existing production may lower emissions intensities, India will need to make the grand switch away from coal to fully decarbonise the industry and sustain its production in the long run.
Khadeeja Henna, Heavy Industry researcher at Global Energy Monitor, said, “India’s ‘build now, decarbonise later’ approach to achieving a net-zero steel industry will backfire in the long run.
While the 2024 roadmap and action plan for greening the steel sector is a positive step forward, transitioning away from coal-based production is more urgent. Substantial investments are needed to build a robust green steel ecosystem, not betting on emerging decarbonisation technologies that have yet to prove their mettle.”