Policies and Enabling Environment to Drive Private Investments for Industrial Decarbonization in India

This policy brief by the Climate Policy Initiative analyzes the policy frameworks and enabling environments required to attract private investment for the decarbonization of India's steel and cement sectors. It focuses on breakthrough technologies (TRL 5-9) and identifies high-impact policy instruments and critical enablers to avoid carbon lock-in and meet India's 2070 net-zero target.

• The steel and cement sectors in India are critical for climate goals, accounting for 15-20% of the country's emissions. In a business-as-usual scenario, emissions from these sectors are projected to increase three-fold by 2050, with demand for these materials expected to grow 3-4-fold by the same year.
• Breakthrough low-carbon technologies for steel and cement (TRL 5-9) are currently commercially unviable in India. By 2030, the cost of abatement for these technologies is expected to be at least 50 USD/tCO2, potentially increasing steel production costs by up to 45% and cement production costs by up to 80%.
• Existing Indian industrial policy frameworks are insufficient for a low-carbon transition as they prioritize growth, energy security, and competitiveness, focusing primarily on 'low-hanging levers' like renewable energy and energy efficiency.
• Six policy instruments are identified as having the highest potential impact on directing private investments toward breakthrough technologies: internationally coordinated carbon pricing, public funding for first-of-a-kind demonstration pilots, viability gap funding as capex subsidies, green public procurement, product embodied-carbon standards, and interest subvention or credit guarantees.
• For carbon pricing to effectively support deep decarbonization in industrial sectors, the price would need to be at least 50 USD/tCO2 by 2030, which is significantly higher than the estimated 5-6 USD/tCO2 under the current Perform, Achieve and Trade (PAT) scheme.
• Critical enabling environment factors that most significantly influence investment decisions include supporting infrastructure (CO2/hydrogen storage, RE generation, and industrial hubs), streamlined permitting procedures, long-term supply and off-take contracts, and the availability of concessional finance and risk mitigation from international sources like MDBs and DFIs.

APA

Kashyap, Y., & Purkayastha, D. (2023). Policies and Enabling Environment to Drive Private Investments for Industrial Decarbonization in India. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/04/Industrial-Decarbonization-in-India_Policy-Brief_Final.pdf

Chicago

Kashyap, Yash, and Dhruba Purkayastha. Policies and Enabling Environment to Drive Private Investments for Industrial Decarbonization in India. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/04/Industrial-Decarbonization-in-India_Policy-Brief_Final.pdf.

Wikipedia

{{cite report |last1=Kashyap |first1=Yash |last2=Purkayastha |first2=Dhruba |title=Policies and Enabling Environment to Drive Private Investments for Industrial Decarbonization in India |publisher=Climate Policy Initiative |date=April 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/04/Industrial-Decarbonization-in-India_Policy-Brief_Final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kashyap2023policies, author = {Kashyap, Yash and Purkayastha, Dhruba}, title = {{Policies and Enabling Environment to Drive Private Investments for Industrial Decarbonization in India}}, institution = {Climate Policy Initiative}, year = {2023}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/04/Industrial-Decarbonization-in-India_Policy-Brief_Final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }