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

The document argues that the steel and cement sectors in India are 'hard-to-abate' and require coordinated government, industry, and financial action to avoid carbon lock-in. Because breakthrough technologies (TRL 5-9) are currently commercially unviable and increase production costs—by up to 45% for steel and 80% for cement—market forces alone cannot drive their adoption. The authors recommend a policy mix of carbon pricing, public funding for demonstration pilots, capex subsidies, green public procurement, and embodied-carbon standards. Additionally, the brief emphasizes the need for a supporting enabling environment, including CO2 and hydrogen infrastructure, streamlined permitting, and concessional finance from international sources.

• The steel and cement sectors in India are critical for achieving net-zero emissions by 2070, as they account for 15-20% of the country's emissions and are projected to see a three-fold increase in emissions by 2050 under a business-as-usual scenario.
• Breakthrough low-carbon technologies for steel and cement (those at Technology Readiness Level 5-9) are currently commercially unviable in India, with abatement costs expected to be at least 50 USD/tCO2 by 2030. Their adoption could increase production costs by up to 45% for steel and 80% for cement.
• Existing Indian industrial policy frameworks are insufficient for a low-carbon transition because they prioritize growth, energy security, and competitiveness, focusing primarily on 'low-hanging levers' like energy efficiency and renewable energy.
• The most impactful policy instruments for directing private investment toward breakthrough technologies include 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 Indian industry, prices would need to reach at least 50 USD/tCO2 by 2030, significantly higher than the estimated 5-6 USD/tCO2 under the proposed National Carbon Market (NCM).
• Key enabling environment factors with high perceived significance for investment decisions include supporting infrastructure for CO2 and hydrogen, long-term forward 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} }