Accelerator Dialogues | Advancing Ambition: Breakthrough Technologies and Solutions Shaping the Steel Sector

By Zoya Zakai, Sai Sri Harsha Pallerlamudi -RMI India Foundation, Aun Abdullah - Lodha

The Net Zero Urban Accelerator—a joint initiative by Lodha and RMI India Foundation—hosted the second webinar in its three-part series on advancing steel decarbonization in India. This blog summarises the key discussions and takeaways from the webinar hosted on 13th March 2024 from 2:30 PM – 4:00 PM IST. The session focused on Breakthrough Technologies and Solutions shaping the steel sector.

The webinar brought together the panel featuring a leading primary steel producer, a leading equipment manufacturer and an AI based platform providing energy tracking and industrial decarbonization solutions. Moderated by Tarun Garg (RMI India Foundation), the session featured esteemed panellists: —Dr. Atanu Ranjan Pal (Tata Steel), Dr. Swaren Bedarkar (Electrotherm), Mr. Harsh Choudhry (Sentra World). The discussion centred around the challenges and opportunities in scaling low-emission steel production in India, focusing on technological advancements, economic implications, and the need for regulatory and financial frameworks to support transition.

Webinar Live Recording

Background

The built environment consumes 68% of the total crude steel that is produced in India . The procurement of steel is currently split between high-emission primary reinforcement steel and marginally lower-emission recycled reinforcement steel from electric furnaces. Given this context, the built environment is poised to play a critical role in driving demand for low-emission steel.

The iron and steel industry is one of the most energy-intensive sectors globally, accounting for approximately 8% of global final energy use [2]. In India, steel sector contributes to 10-12% of total emissions [3]. High-emission pathways dominate the production route in India BOF producing 43% of crude steel [1]. On the other hand, Induction Furnaces (producing 35% of crude steel) and electric arc furnaces (producing 22% of crude steel) are increasingly meeting demand with higher scrap percentages and renewable energy integration [1].

Energy efficiency with deployment of best available technologies has the potential to reduce the energy intensity of steelmaking by up to 8%, which in turn lowers costs, reduces emissions, and enhances industry competitiveness [4]. Key strategies for improving efficiency include waste heat recovery, adoption of best available technologies, advanced process control, optimized raw material selection, increased scrap utilization, and promotion of a circular economy. A deeper exploration of innovation opportunities across the steel production value chain reveals potential across various stages from iron ore mining and beneficiation to clean energy supply and advancements in iron and steel production. While long-term technological shifts, such as green hydrogen adoption, hold promise, numerous viable solutions in realm of energy

Key Takeaways

Latest Industry Trends & Technological Advancements

• Process Transition and Steel Quality: Transitioning integrated steel plants to electric steelmaking is complex.
  • The Direct Reduction of Iron-Electric Furnace route (DRI-EAF/IF) faces quality issues if iron ore quality is low or gangue content is uncontrolled. Impurities like phosphorus and sulphur are hard to remove in secondary processes, but Ladle Refining Furnace (LRF) technology can reduce phosphorus by up to 90% (0.1% to 0.03%) and sulphur from 0.07-0.08% to 0.007%, at ₹1,800-2,000 per ton. While LRF is used in Basic Oxygen Furnace (BOF) and EAF refining, it is crucial for Induction Furnaces (IF) to meet TMT bar quality standards.
  • Induction Furnace employing coal-derived gas as an interim reductant offers a pragmatic approach to reducing emissions while India expands its green hydrogen infrastructure, given the disparity between coal-based DRI emissions (3.2 tons CO2/ton steel) and gas-based DRI emissions (1.6-1.7 tons CO2/ton steel). Despite energy efficiency improvements, the key challenge is carbon use in iron oxide reduction, necessitating alternative reductants.
• Efficiency Improvements and Renewable Energy: Steel decarbonization can be accelerated through process efficiency and renewable energy integration.
  • Key technological advancements—such as single-card electronics, fiber optics to reduce lag, remote commissioning, and direct rolling—enhance efficiency.
  • Continuous improvements in equipment and high-efficiency furnaces have lowered Induction Furnace energy consumption to 675 kWh/ton, saving 60-80 kWh/ton and reducing CO2 emissions by 42 kg/ton.
  • Traditionally, steel billets were cooled from ~1100°C to room temperature before rolling. Now, ~90% of Induction Furnace plants use direct rolling, eliminating cooling and reheating. This saves ~30 liters of Light Diesel Oil (LDO) per billet, cutting ~90 kg of CO2 emissions.
  • As opposed to using BOF (174 kWh/ton), electric furnaces use higher electricity consumption (EAF-664kWh/ton, IF-675-825kWh/ton) for steelmaking [3]. Depending on the proportion of scrap used, electricity consumption can vary for the steel production impacting the emissions. Transitioning to renewable energy (RE) for power supply has great potential to reduce emissions- especially for steelmaking using electric furnaces. The penetration of RE in steel sector remain feeble though - 3.1% for ISPs and 11.3% in the case of small units [3].

Scaling Low-Emission Steel Production

• Barriers to Scaling Low-Emission Production: Scaling low-emission steel production is significantly impeded by the limited availability and high cost of alternative reduction technologies. While green hydrogen is considered the ideal reductant, its current scarcity and expense present major obstacles, rendering widespread adoption impractical without a reliable, affordable supply. Furthermore, the environmental advantages of EAFs and Induction Furnaces are contingent upon access to green electricity, a significant challenge in India's predominantly thermal power-reliant grid.
• Scrap availability: Concerns about scrap availability poses a significant challenge for Induction Furnace-based steelmaking in India. India's scrap supply is limited due to the long lifecycle of steel products (30+ years) and a low recycling rate (~30-40%) and varied regional availability (relatively more availability in Maharashtra or Punjab region). This makes it difficult for India to rely on scrap-based scaled production, necessitating alternative pathways to decarbonization as well.
• Digitalization, Emissions Tracking & Certification: We need to ensure that right Measurement and Verification (M&V) system is in place for steel players which is dependent on what regulation the player is eyeing for and is consumer need. The steel industry encounters numerous carbon footprinting methodologies and standards, including Corporate Carbon Footprint (CCF), Product Carbon Footprint (PCF), Life Cycle Assessments (LCAs), and Environmental Product Declarations (EPDs), each with variations from organizations such as the World Steel Association, the Greenhouse Gas (GHG) Protocol, and Responsible Steel. Furthermore, various certifications, such as the International Organization for Standardization (ISO) and the Confederation of Indian Industry (CII) Green Pro, along with regulations like the Carbon Border Adjustment Mechanism (CBAM), Carbon Credit Trading System (CCTS), and Green Steel Taxonomy, contribute to the complexity. Beyond methodology, reporting frequency is crucial. Implementing a system of real-time emissions monitoring and daily operational adjustments, mirroring the rigor of daily production quality reviews, can achieve substantial emission (around 5-10%) reductions without requiring significant capital expenditure (CAPEX). AI use cases for optimization of data mapping. This proactive approach leverages existing infrastructure and operational data to optimize processes for environmental performance alongside production efficiency. Data needs to be public

Economic Implications of Low-Emission Steel Production

• Regulatory Incentives and Mandates: India's lack of carbon regulations and financial incentives hinders low-carbon steelmaking. Unlike United Kingdom’s coal-fired electricity ban, no policies drive investment. If customers pay a premium for green steel, investments can follow. Demand aggregation initiatives, like RMI’s Sustainable Steel Buyers Platform, could create market incentives but need strong regulatory support. The absence of a regulatory push for estimating price premium further challenges financial viability.
• Economic Barriers to Low-Emission Steel Adoption: High CAPEX and weak carbon credit mechanisms hinder the adoption of alternative fuels and alternate reductants. The absence of regulations incentivizing low emissions or penalizing high emissions further discourages investment in technologies like EAFs and IFs, giving blast furnace operators a competitive edge. This imbalance slows large-scale industry shifts toward greener production. A key economic challenge is the cost gap between hydrogen-based steel production ($550/ton) and conventional blast furnace methods ($300/ton). With no subsidies or carbon pricing, the financial risk of hydrogen-based technologies remains high. While major players like Tata Steel explore hydrogen solutions, the lack of policy support and clear financial incentives remains a major obstacle. 
  Smaller manufacturers, constrained by capital, prioritize immediate energy efficiency gains to reduce kilowatt-hour consumption, which doesn’t address the major issue of high emissions during the ironmaking stage. Without a strong market signal—such as a price premium or robust carbon pricing—green technology adoption remains financially unviable. Sustainability requires a business to be sustainable. Without a market willing to pay the increased cost of green steel, the transition remains challenging.
• Investment Challenges and Opportunities: Sustainability-linked loans and bonds are gaining traction in steel finance. Select leading steel players have secured large-scale funding at lower interest rates by showcasing a strong sustainability track record and clear decarbonization goals. Foreign investors—from Japan, the Middle East, and Scandinavian funds—prioritize projects aligned with global sustainability targets. With 70% of India's infrastructure yet to be built, foreign investment will be crucial, making sustainability a key funding criterion. However, inconsistent Scope 3 emissions reporting undermines trust in sustainable finance. To improve transparency, steel players are adopting digital tracking for real-time carbon data and batch-specific reports. Investors now demand verifiable emissions data integrated into Enterprise Resource Planning (ERP) systems. As scrutiny intensifies, companies must enhance transparency to build trust in the green steel market.

Future Outlook: 

India's steel industry faces a dual challenge: transitioning to electric steelmaking while maintaining quality and scaling low-emission production amid cost and regulatory barriers. strong policy incentives, demand aggregation, and transparent emissions reporting are crucial for attracting investment and driving sustainable growth. Collaboration is key to overcoming these hurdles and achieving a low-carbon steel sector.

References

1. Annual Report 2023-24, Ministry of Steel, 2024
2. Iron and Steel Technology Roadmap, IEA, 2020
3. Greening the Steel Sector in India, Roadmap and action plan, Ministry of Steel, 2024
4. Decarbonising the Indian Steel Industry: Roadmap towards a Green Steel Economy, RMI, 2023 efficiency and process efficiency exist today that can significantly reduce emissions and improve efficiency using best available technologies today.