According to the agency’s assessment, carbon emission intensity among Indian steel producers stands at approximately 2.5 tonnes of CO₂ per tonne of steel, including Scope 1 and Scope 2 emissions. This figure is roughly 12% higher than the global average for the blast furnace basic oxygen furnace (BF-BOF) route.
The Indian government’s implementation of the Green Steel Taxonomy in December 2024 under the National Green Steel Mission is viewed as a positive step, as it defines which types of steel can be classified as “green” through phased emission thresholds. However, ICRA emphasizes that the majority of India’s primary steel producers still operate significantly above even the upper limit of this green range, highlighting a substantial decarbonization gap.
Girishkumar Kadam, Senior Vice President and Group Head of Corporate Sector Ratings at ICRA, noted that the planned capacity expansion of approximately 80–85 million tonnes by 2030–31 in India will largely rely on coal-based BF-BOF technology. According to Kadam, the share of this production route is expected to rise from its current level of around 45% to approximately 51% by 2030–31, indicating that high carbon intensity will persist in the medium term. Consequently, near-term decarbonization in India’s domestic steel sector is expected to stem primarily from improved operational efficiency and greater adoption of renewable energy. ICRA forecasts that these measures will drive a reduction of approximately 19% in emission intensity by 2029–30, bringing the sector average down to about 2.0 tonnes of CO₂ per tonne of steel by the end of the decade. Most of this decline is anticipated to result from renewable energy integration and process optimization.
The report highlights that Indian steelmakers have already announced plans to deploy approximately 9 gigawatts (GW) of renewable energy capacity to replace fossil fuel-based electricity. It notes that switching solely to green power could reduce emissions by up to 13% in BF-BOF based facilities and by as much as 22% in DRI based production units. Additionally, higher scrap usage in furnaces, waste-heat recovery systems, and other energy-efficiency measures—as well as operational improvements such as iron ore beneficiation are expected to further lower CO₂ emissions per tonne of steel. However, the report also states that electric arc furnace (EAF) capacity based on scrap and offering a much lower carbon footprint will remain limited in India due to constrained scrap availability.
ICRA’s assessment further underscores that high green hydrogen costs present a significant barrier. It indicates that the hydrogen-based DRI-EAF route is likely to see only limited adoption in the medium term due to the current high cost of green hydrogen. According to the agency, for DRI-EAF production to reach breakeven, the cost of green hydrogen would need to fall from its current level of over USD 3 per kilogram to approximately USD 1.5–1.6 per kilogram. Given that these cost levels appear unattainable in the near to medium term, large-scale green steel capacity additions are also expected to remain limited during this period.
Looking beyond 2030, the report anticipates an acceleration in demand for green steel in India. This growth is expected to be driven by tightening ESG compliance norms, decarbonization efforts across supply chains by major end-user sectors including automotive, infrastructure, and capital goods and supportive policy frameworks. While ICRA acknowledges that India’s green steel ambitions are strategically aligned with global trends, it stresses that these goals represent a long term vision rather than an imminent transformation. The pace and scale of this transition will ultimately depend on economic conditions, technological readiness, and policy support.
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