Date: 29/08/2022

Relevance: GS-3: Conservation, environmental pollution, and degradation, environmental impact assessment; Indian Economy and issues relating to planning, mobilization, of resources, growth, development, and employment

Key Phrases: Carbon Emissions from Steel Manufacturing, Decarbonized Steel, National Steel Policy, JSW Steel: Case Study.

Context:

• As India celebrates its 75th year of independence, the contribution of steel to the expansion of India’s economy makes us feel proud.
• But, at the same time, we need to be aware of steel manufacturing’s heavy emissions of carbon.
• In this context, let us focus on emissions-related problems and the way forward w.r.t. steel production in India.

Background

• Today, decarbonized steel has a big role to play in a low-carbon India as an essential ingredient for the country’s green future.
• Decarbonization of steelmaking will also lead to the decarbonization of allied industries such as cars, infrastructure, and buildings.
• That is why India must confront the challenge of decarbonization head-on.

India specific statistic

• India is the world’s second-largest producer of steel, with its annual output of 106 million tonnes now exceeding the pre-pandemic high of 100 million tonnes.
• The National Steel Policy says a capacity of 300 million tonnes per annum will be required by 2030 to satisfy the demands of our fast-growing economy.
• It implies a two-fold rise in output and a parallel rise in energy consumption. Steel is a massive consumer of energy and it is responsible for one-fifth of industrial energy usage, making steel an extraordinarily heavy emitter.
• Steel contributes almost a third of direct industrial CO2 emissions or 10% of India’s total energy infrastructure CO2 emissions.

Indian Steel Industry

• It is divided into three broad production-based categories -
  1. Big integrated steel-making facilities which utilize iron ore and coking coal to produce steel.
  2. The bulge segment of small producers that use sponge iron, melting scrap, and non-coking coal for steelmaking.
  3. Units of blast furnace-basic oxygen furnace, which account for 46% of steelmaking and is expected to rise to 56% by 2030.
• Over the same period, big integrated manufacturers’ share of steelmaking will rise faster than that of small producers because demand for infrastructure, construction, manufacturing, transport, and renewable energy favors producers of scale over smaller players that are typically dependent on a limited supply of ferrous scrap.
• The technology behind steelmaking is similarly diverse across both primary and secondary sectors.
• Yet clean technologies could force common adoptions that would transform steel manufacturing and reduce its environmental damage. This will be neither quick nor without large investments.
• Key decarbonization technologies are not yet feasible, nor commercially viable.

Should we wait for the emergence of appropriate technology?

• We should seek cuts in emissions through better processes and energy efficiency, a transition to renewables, the use of alternative fuel sources, deployment of better quality raw materials, and acceleration of material circularity.

• As Indian steel demand is forecast to continue growing until 2050, we have ambitious plans to expand, and are integrating the best clean technologies available in this expansion.
• Our target is a 23% reduction in greenhouse gas intensity by 2030 (relative to a 2020 baseline).
• We have earmarked ₹10,000 crores for investments to reduce our carbon emissions in projects across our business.
• We plan to expand our capacity over phases from 27 million tonnes per annum at present to 37 million tonnes per annum to meet demand at home and globally.
• Our ongoing expansions aim to produce steel with higher use of renewable power, digitalization to achieve operational efficiency and the best available technologies to cut emissions.

Our thrust on research and product development

• It has made us a leading supplier across categories, from advanced high strength steel to safety and lightweight requirements of automotives, and tinplate used in food packaging, to corrosion-resistant steel for white goods.
• A strategic technical collaboration with JFE Steel Japan since 2010 continues to add value both in products and services.
• Our R&D focuses on new process and product development, process improvements for quality maximization, cost and energy optimization, waste utilization and natural resource conservation.
• Partnerships with industry institutes have resulted in patents and the publication of technical papers focused on innovation.

Need of the hour

• There is a necessity of stepping up ESG investment decisions.
• It is not only investors, but also employees, customers, suppliers and other stakeholders who are looking to us to design and implement long-term, sustainable policies that support growth, address environmental challenges and play a crucial role in the country’s decarbonization journey.
• That throws up risks that directly impact profitability and shareholder value.
• We must consume resources wisely, regulate carbon emissions and manage social and governance factors.
• Our strategic thinking around production and processes must also ensure we remain within our ESG framework.
• To meet these commitments, we need to have a clearly defined sustainability strategy with ambitious yet credible targets set across key sustainability indicators.

Conclusion

• Climate change is the greatest challenge of our lifetimes and presents both immediate crisis and near-term opportunity.
• As private enterprise assumes increasing leadership in addressing challenges and delivering innovative, low-carbon solutions, ramping up collaboration between industry, entrepreneurs and finance to facilitate this work is paramount to success.

Source: Live-Mint

Mains Question:

Q. An array of strategic choices need to be exercised to cut the carbon intensity of the steel industry. Highlighting various challenges associated with the industry, analyze this statement. [250 Words].