Large Indian steelmakers are seeking some support from the local government as they look to produce green steel given that the higher costs of producing this steel is unlikely to be borne by end-users.
Steelmaking is an energy intensive business, and accounts for among the highest carbon emissions globally. Production of green steel basically means doing so without the usage of fossil fuels in order to cut down on carbon emissions.
While most steelmakers have committed to being net zero on emissions over a period of time, the process will entail significant costs.
“This transition to green will involve a lot of capital expenditure, if you shift from coal to gas or hydrogen, and at least for the next ten years will be more expensive,” TV Narendran, the chief executive officer and managing director of Tata Steel Ltd told ET recently.
One of the country’s largest steel producers, Tata Steel, recently ran a trial for injecting hydrogen gas at its blast furnace in its plant at Jamshedpur, where it has the capacity to produce 12 million tonne of steel each year.
For the replacement of hydrogen as a clean fuel vis-à-vis coal, it has to be available at less than $2 per kilo, and must be green, Narendran said. The cost of the hydrogen used for the trials was around $12 per kilo which is not viable if it needs to be used at a large scale, he said.
Sajjan Jindal, chairman of the JSW group, which houses JSW Steel, said that while energy needs to become sustainable, customers are unlikely to bear the extra costs involved in making green steel.“In India, we as an industry, don’t believe that the government will be able to pay for these kinds of things. There could be some sort of cross subsidy that could probably happen, where they will put more tax of coal and then subsidise some industries,” Jindal said at a recent discussion.
India has promised to be net zero on emissions by 2070. JSW Steel has a target of being net zero on emissions by 2050, while Tata Steel’s target is 2045.
Tata Steel’s blast furnace at Jamshedpur emits about 2.1-2.2 tonne of carbon for each tonne of steel produced, which compares to 2.45 tonne of carbon emitted at Bhushan Steel. “There is no benefit we get for Jamshedpur as compared to Bhushan. We do it because we think it is the right thing to do, but there is no financial motivation do it,” Narendran said.
Last month, Union steel minister Jyotiraditya Scindia said that the government may consider making it mandatory for local steelmakers to dedicate a portion of their output to green steel.
Earlier this year, the ministry of steel said that in the short-term, up to 2029-30 (Apr-Mar), the focus would be on reducing carbon emissions in the steel industry through the promotion of energy and resource efficiency and renewable energy. Over the medium-term, between 2030-2047, the focus will be utilisation of green hydrogen, while in the long-term, that is 2047-2070, the focus will be disruptive alternative technological innovations which can help in bringing about this transition.