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How India's G20 presidency can give a fillip to green policies for global steel industry

How India's G20 presidency can give a fillip to green policies for global steel industry

Decarbonising steel will be pivotal to liberating India from its heavy and historic reliance on fossil fuels

Dilip Oommen, CEO at ArcelorMittal Nippon Steel India Dilip Oommen, CEO at ArcelorMittal Nippon Steel India

INDIA’S G20 PRESIDENCY holds immense significance in driving meaningful progress on climate change. Addressing the G20 Environment and Climate Ministers’ meeting in Chennai, Prime Minister Narendra Modi had recently asserted that climate action must follow ‘Antyodaya’, which means that climate policies and initiatives must be designed in a way that they not only address environmental concerns but also social inequalities, and promote inclusivity.

The G20 must constitute a high-level group of government and industry representatives from each member for global co-operation, which will help in formulating green, public and corporate procurement policies to accelerate the development of net-zero steel. Establishing an actionable steel decarbonisation road map with considerations for national circumstances, technological innovation and capacity-building is essential. While steel production has historically been linked to emissions, there is a sense of optimism for the future. If steel changes, India changes. With a ripple of allied green manufacturing practices, the path to net-zero is becoming clearer. Further, achieving the $5-trillion economy target by 2027 and doubling steel production capacity to 300 million tonnes in the next nine years are also intertwined. Which brings us to the question: Will India seize the opportunity to decarbonise steel manufacturing through ‘Amrit Kaal’ and become ‘Aatmanirbhar’?

Accelerating Adoption of Renewable Energy

Decarbonising steel will be pivotal to liberating India from its reliance on fossil fuels. The government’s target of 500 GW of installed renewable energy (RE) capacity by 2030 represents a concrete policy push towards this ambition. Achieving this necessitates a comprehensive approach that addresses both environmental and economic challenges concurrently, resulting in the accelerated adoption of RE sources like solar, wind, hydro, biomass and nuclear power. These sources can replace India’s fossil fuel-fired power plants, which emit 65 per cent of CO2.

Further, the development of power storage solutions for RE is also of utmost importance. At present, the installation of battery energy storage systems (BESS) is not economically viable. To bridge this gap, promoting the use of pumped hydro storage becomes crucial. Currently, the cost of green hydrogen remains high due to its primary expense: clean energy, which is also steeply priced, contributing 70 per cent to the total production cost. Hence, it becomes important to reduce the overall cost of RE. Also, electrolytes make up 15 per cent of the hydrogen energy cost, which is expected to go down in the coming years. Green hydrogen holds potential for utilisation in both the blast furnace process and in the direct reduced iron (DRI) route of net-zero steel production. But steelmakers can use natural gas until green hydrogen becomes commercially viable. Also, we can explore carbon capture, utilisation and storage (CCUS) technologies, among others, that are being developed.

The Role of Government and Policies

The government should adopt a carrot-and-stick policy to accelerate green transition. Also, it needs to implement uniform measurement and reporting standards to measure carbon footprint. Demand for net-zero steel from the government can also boost its production. A favourable tax structure will encourage capital investment, while bold policies can create new markets. Net-zero steel users should also be incentivised.

Implementation of policies to facilitate the reduction of renewable power costs, particularly by allowing for an increased capacity of solar panels, should be a high priority. Setting aside the 40 per cent customs duty on solar panels will help enhance solar panel manufacturing. Also, natural gas should be brought under GST. As the net-zero goal leads to increased use of scrap metal, it is imperative to optimise domestic availability. While it is necessary to ramp up transmission capacities, the waiver of transmission charges should be extended for an additional two years beyond June 2025. The recently launched green hydrogen production incentives (for three years) are a step in the right direction; but they need to be increased both in terms of volume and duration. The government’s critical role also lies in ensuring that developed nations provide both technological and financial support to the developing countries for achieving net-zero emissions.

A Synergistic Path

Supply chain management is fundamental for sustainable practices at every stage. For instance, steel is a key raw material in the manufacturing of RE elements, including solar panels, wind turbines, and transmission towers. In the manufacturing of vehicles, significant benefits derive from using low-carbon steel that is stronger and lighter too. A car that weighs less enhances fuel efficiency, resulting in lower energy consumption and emissions.

Apart from this, collaboration between larger firms and start-ups can provide a win-win situation, inspiring disruptive ideas and technologies. Overall, we need a multi-faceted approach involving government policies, industry actions, start-up innovation, and collaboration to transition India away from fossil fuels. And the G20 presidency presents India with an opportunity to effectively steer the grouping towards a brighter future with its potential to champion sustainable practices, advocate equitable solutions and foster international collaboration.

The author Dilip Oommen, CEO at ArcelorMittal Nippon Steel India (Views are personal)    

Published on: Aug 26, 2023, 4:52 PM IST
Posted by: Priya Raghuvanshi, Aug 24, 2023, 2:44 PM IST