New tech, robust policy, hefty financing needed to decarbonize hard-to-abate sectors, say industry leaders

New Delhi: A host of new technologies, robust government policy to back them, and green financing to securely tie-in everything into returns for investors is needed to decarbonize hard-to-abate sectors in India such as steel and cement, a panel of experts said at the Mint Sustainability Summit in New Delhi recently.

The panel comprised steel industry veterans Sanjay Kumar Singh, former secretary in the ministry of steel and currently the director of strategy & external relations, Jindal Steel; and Arvind Bodhankar, chief sustainability officer, Arcelor Mittal Nippon Steel India.

No single tech solution

No single technology can be the “silver bullet” to decarbonize hard-to-abate sectors, said Bodhankar, adding that there are multiple solutions available. “You need to have a technology, you need to have a policy, and you need financing. On the policy side, we are moving in the right direction,” he said.

The two executives discussed new technologies that would reduce carbon emissions in the steel sector, green taxonomies to nudge steel makers towards cleaner manufacturing of steel, challenges in the industry, as well as the industry’s outlook on returns from decarbonizing operations.

Reducing emissions becomes critical in the light of global geopolitical headwinds such as tariff wars, and carbon taxes being put by various nations. These conditions can dent Indian exports, and in the long-run, make sectors unfeasible.

Bodhankar stressed that decarbonizing will not hurt profits. “Sustainability and profitability go hand in hand. And if you reduce carbon emissions, eventually you will have a lower cost of production,” he said.

Steel is a hard-to-abate sector because of the longevity of the capital goods and other infrastructure involved in steelmaking, said Singh. “What distinguishes steel from other industries is the long lifespan of infrastructure for the technology which has been put in place to produce steel, and also long-term carbon locking. One blast furnace which has been set up is there for 25 years,” he said.

The Centre has put in a place a new green steel taxonomy in December 2024, defining ‘green’ steel with an emission cap. According to this taxonomy, any steel produced in the country with emissions less than 2.2 tons of carbon dioxide per ton of steel is green steel. Also, there is in place a star-rating based system, where green steel with the lowest emissions under 1.6 tons of carbon dioxide is given a five-star rating, with the lowest rating for green steel being three star.

The taxonomy will include scope 1,2, and 3 emissions from manufacturers, but will not upstream mining, downstream emissions, and transportation emissions.

Addressing concerns about demand for green steel and navigating the pulse of consumers, Bodhankar said demand will be generated because every business is looking to reduce its emissions. “Consumers have been demanding green steel from us as they have their own scope 3 emission targets. If there is an extra cost for green steel, some of it the consumer will bear, some of it I will bear,” he said.

Multiple technologies exist to decarbonize hard-to-abate sectors, especially in the domains of energy, the panel discussed. But these technologies need scale and viability, the panellists said.

Carbon caps drive innovation

“There is no scalable and economically viable technology available. A lot of technology work is going on in India, in the experimental phase, lab phase, pilot phase, but they are not suitable for our requirement,” said Singh. “In times to come, there might be a carbon capture technology, utilization, storage technology, but it requires a huge ecosystem for it to be there.”

Using green hydrogen to make green steel has potential, but it is not the only solution to decarbonizing the sector, according to the panellists.

Developments in making green hydrogen in an environmentally friendly way may aid in reducing carbon emissions in sectors such as steel, said Singh. This includes technology such as electrolysis, bio-mining, as well as carbon capture, utilization, and storage (CCUS) may help if done at scale, he added.

“The small marginal steps which are taken towards carbon emission reduction, they are going to be rewarded through this kind of setting,” said Singh.