Why India's "build now, decarbonize later" approach to achieving net zero in the steel industry will fail

This research paper by Global Energy Monitor analyzes India's steel industry, arguing that its current strategy of expanding coal-based capacity before implementing decarbonization—a "build now, decarbonize later" approach—risks creating massive stranded assets and locking in high emissions. The document details the industry's heavy reliance on blast furnace-basic oxygen furnace (BF-BOF) and coal-based direct reduced iron (DRI) production, while evaluating the potential and limitations of green hydrogen, scrap-based production, and renewable energy integration to meet India's 2070 net-zero goal.

• India's steel industry is characterized by an extreme reliance on coal, with over 87% of operating ironmaking capacity and 90% of capacity under development dependent on coal. This has resulted in the highest average emissions intensity of crude steel production globally at 2.55 tonnes of CO2 per tonne of crude steel (tCO2/tcs), which is 38% higher than the global average of 1.85 tCO2/tcs.
• The "build now, decarbonize later" strategy, driven by the National Steel Policy's goal to increase crude steel capacity from 125 million tonnes per annum (mtpa) to 300 mtpa by 2030, creates a significant risk of stranded assets. Estimated losses from new steel capacity are between US$124 billion and US$187 billion, given India's 2070 net-zero commitment.
• Decarbonization is complicated by a relatively young fleet of blast furnaces; over 72% (75 mtpa) of operating capacity was developed in the last two decades. This creates a risk of fossil lock-in as these units may still be recovering initial investment costs.
• India is the world's largest producer of direct reduced iron (DRI), with a unique reliance on coal-based rotary kilns, which are used by approximately 80% of India's DRI production. While the National Green Hydrogen Mission aims for 5 million tonnes of green hydrogen capacity by 2030, green hydrogen is unlikely to be the primary fuel for steelmaking before 2050 due to high costs and a lack of production ecosystems.
• Secondary steel production via electric arc furnaces (EAF) and induction furnaces (IF) is limited by scrap availability. Scrap-based production accounts for only 21% of total steel production, and India's scrap demand is projected to reach 70–80 million tonnes by 2030.
• The Ministry of Steel has set a target to increase renewable energy penetration to 43% by 2030, up from 7.2%, which is expected to reduce the average emissions intensity of crude steel production by 8%. However, 80% of the 45 GW of planned renewables-based hydrogen projects are currently only in the concept stage.

APA

Swalec, H. K. C. (2024). Why India's "build now, decarbonize later" approach to achieving net zero in the steel industry will fail. Global Energy Monitor. https://globalenergymonitor.org/research/why-indias-build-now-decarbonize-later-approach-achieving-net-zero-steel-industry-will

Chicago

Swalec, Henna Khadeeja, Caitlin. Why India's "build now, decarbonize later" approach to achieving net zero in the steel industry will fail. Global Energy Monitor, 2024. https://globalenergymonitor.org/research/why-indias-build-now-decarbonize-later-approach-achieving-net-zero-steel-industry-will.

Wikipedia

{{cite report |last1=Swalec |first1=Henna Khadeeja, Caitlin |title=Why India's "build now, decarbonize later" approach to achieving net zero in the steel industry will fail |publisher=Global Energy Monitor |date=29 December 2024 |url=https://globalenergymonitor.org/research/why-indias-build-now-decarbonize-later-approach-achieving-net-zero-steel-industry-will |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{swalec2024why, author = {Swalec, Henna Khadeeja, Caitlin}, title = {{Why India's "build now, decarbonize later" approach to achieving net zero in the steel industry will fail}}, institution = {Global Energy Monitor}, year = {2024}, month = dec, url = {https://globalenergymonitor.org/research/why-indias-build-now-decarbonize-later-approach-achieving-net-zero-steel-industry-will}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }