How to decarbonize the steel industry

Given large contribution of steel manufacturing to carbon emissions, an industry-wide shift to more sustainable practices is important. Photo: iStock
Given large contribution of steel manufacturing to carbon emissions, an industry-wide shift to more sustainable practices is important. Photo: iStock


The challenge seems steep but an array of strategic choices can be exercised to cut the carbon intensity of this vital industry

I am proud of steel’s contribution to the expansion of India’s economy. I am also aware of steel manufacturing’s heavy emissions of carbon. Today, decarbonized steel has a big role to play in a low-carbon India as an essential ingredient for the country’s green future.

The fact is that decarbonization of steel making will also lead to decarbonization of allied industries such as cars, infrastructure and buildings. In other words, steel has primary and secondary level impact on Scope 3 emissions across India’s economy. That is why India must confront the challenge of decarbonization head on.

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 capacity of 300 million tonnes per annum will be required by 2030 to satisfy the demands of our fast-growing economy. That implies a two-fold rise in output and a parallel rise in energy consumption. Yet, steel is already a massive consumer of energy, responsible for one-fifth of industrial energy usage, making steel an extraordinarily heavy emitter. Today, steel contributes almost a third of direct industrial CO2 emissions, or 10% of India’s total energy infrastructure CO2 emissions.

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The Indian steel industry is divided into three broad production-based categories. The first: big integrated steel making facilities which utilize iron ore and coking coal to produce steel. The second is the bulge segment of small producers that use sponge iron, melting scrap and non-coking coal for steelmaking. The third are units of blast furnace-basic oxygen furnace, which account for 46% of steelmaking, 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 favours 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. Does that mean we as a sector must wait for the emergence of appropriate technology? Or should we seek cuts in emissions through better process and energy efficiency, a transition to renewables, the use of alternative fuel sources, deployment of better quality raw materials and an acceleration of material circularity? The set of choices is wide.

At JSW Steel, we have made our choice: we are doing all the above. We are using the best available technologies, transitioning to renewable energy (RE) through our group company JSW Energy, collaborating with external experts to assist in our decarbonization journey, and introducing digital tools to track and monitor progress.

We have earned a reputation for being both first and fast. As Indian steel demand is forecast to continue growing to 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 crore 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 best available technologies to cut emissions.

Our thrust on research and product development 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.

I recognize the 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 have a clearly defined sustainability strategy with ambitious yet credible targets set across key sustainability indicators. My leadership team recognizes this responsibility. We’re all committed to the challenge.

This article is part of a series ahead of Climate Tech Convening India, an event by the Environmental Defence Fund. Mint is the event’s media partner. Scan this QR code for more details.

Sajjan Jindal is chairman, JSW Group.

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