Accelerator Dialogues Driving Demand for Low-Emission Steel: Market Dynamics & Procurement Strategies Webinar Summary

By Lodha

Overview of participation

The panel featured leading primary and recycled steel producers and a prominent demand-side player, all with a strong commitment to sustainability. In an insightful conversation moderated by Ms. Sukanya Paciorek, our panellists — Mr. Ankit Todi, Mr. Pradeep Agarwal and Mr. Sumit Bhatia — shared ground realities on the topic from both the supply-side and demand side. We explored conversation around green procurement policies, the potential of recycled steel, and the challenges of accurately assessing the carbon footprint of steel products, decarbonization measures, and associated cost implications. The webinar attracted diverse stakeholders, including steel manufacturers, construction firms, real estate developers, architects, environmental consultants, researchers, non-profit organizations, and government agencies.

Webinar Live Recording

Background

India is the world’s second largest steel producer, accounting for approximately 7.4% (140 MT) of the world's total steel output1. As a resource-intensive industry, steelmaking demands significant quantities of raw materials (iron, coke, limestone alloying elements, etc.), and energy. India is also the second largest consumer of finished steel globally1. India's per capita steel consumption is about half of the global average, with ambitions to almost double production capacity to 300 million tonnes and boost per capita consumption to 160 kg by 2030-312. From an emissions standpoint, the emission intensity of steel produced in India is about 25% higher than the global average2. To address the environmental implications associated with this rising steel demand and accelerate the transition towards low-emission steel, the Ministry of Steel has recently released a roadmap, action plan and taxonomy for green steel in India. The buildings and infrastructure sector, consuming 68% of India’s steel production, plays a pivotal role in shaping the market for low-emission steel1. This webinar explored data-driven decision making, supplier engagement strategies, and barriers and opportunities for scaling low-emission steel demand in India’s building sector.

Key Takeaways

Data-Driven Decision Making:

• Significant carbon footprint of Steel: Steel represents one of the most significant contributors to scope-3 emissions for most consumers, making it a critical focus area for sustainability efforts. The decarbonization of the steel sector is intrinsically tied to the decarbonization strategies of other sectors.
• Emissions related data-scarcity: Despite increased awareness and growing market demand for environmental data, there is limited availability of environmental performance data within the supply chain. Enabling more industry led initiatives for emissions reporting in alignment with international standards such as GHG protocol and World Steel Association guidelines, while improving process efficiency, optimizing capacity utilization and increasing digitization and automation to improve transparency and reliance on reported data for emissions reporting.
• Standardization and Market Mechanisms: There isn't currently a strong market willingness to pay significant premiums for green steel—given the voluntary nature of most sustainability initiatives—climate-conscious industry leaders can provide soft incentives. Additionally, buyers require standardized metrics to make informed procurement decisions. This requires detailed understanding of the emission footprints of different steel grades and close collaboration with suppliers to measure emission factors accurately.

Scaling challenges and Opportunities:

• Infrastructure and Supply Chain Development: The transition to circular economy practices in steel production requires significant supporting infrastructure. Major challenges include the substantial upfront costs for plant modifications and the development of efficient supply chain systems for handling and sorting quality scrap. The industry faces particular challenges in securing high-quality scrap due to India's relatively short industrial history and consumer behavior patterns that favor prolonged product use. Incentivizing the end-consumer for recycling steel products, establishing an organized scrap market, investments in the advanced recycling infrastructure and innovative models can potentially boost scrap availability and supply in the country
• Technology transition: The industry's current reliance on low-grade raw materials and coal-based energy presents significant challenges. The industry is working to decrease reliance on imports by improving the quality of domestic coal through process improvements, ultimately aiming for increased productivity and greater commercial viability. Furthermore, electric furnaces offer promising solutions with high recycling rates and the potential for cleaner energy integration. However, limited capacity of electric furnaces (BF-BOF route – upto 5 MT, DRI-EAF route – upto 2.5 MT) may necessitate reliance on emission-intensive blast furnace-basic oxygen furnace (BF-BOF) routes to meet production targets in alignment with the National steel policy.
• Renewable Energy Integration: The current renewable energy penetration in the steel sector stands at just 7.2%, with government targets aiming for 45% by 20302. Leading companies are showing the way forward, with manufacturers like JSW Steel transitioning to 100% renewable energy and recycled steel producers like ARS targeting 80-85% renewable usage by 2025.
• Quality Assurance and Awareness Creation: There exists considerable apprehension regarding the quality of low-emission and recycled steel products, coupled with limited understanding of their environmental implications. To address these concerns, the industry must focus on pilot programs, joint demonstration projects, and targeted awareness campaigns that can help overcome misconceptions and build market confidence.
• Economic Incentives and Market Mechanisms: Cost premiums for low-emission steel currently manifest through either regulatory requirements or consumer pricing. The conversation around green products remains primarily focused on operational rather than embodied carbon footprint. Without strong consumer demand, the ability to absorb higher premiums is limited, particularly in industries where raw material costs are significant.

Supplier Engagement Strategies:

• Industry Evolution and Collaboration: The maturity of sustainability discussions has led to companies developing comprehensive plans for transitioning to net-zero steel production, moving beyond initial amusement about the intersection of sustainability and procurement. This evolution demonstrates the power of positive advocacy and collaboration in achieving both economic and environmental objectives.
• Innovation and Process Improvement: Industry-led initiatives like JSW's SEED (Sustainable Energy Environment and Decarbonisation) program demonstrate the potential for systematic improvements. These programs engage shop floor workers and managers in identifying and implementing process improvements, waste heat recovery systems, and efficiency measures that can achieve significant emission reductions without major technological overhauls.
• Future Technologies and Market Development: Beyond a point, the successful decarbonization of the steel sector will depend heavily on the availability and implementation of breakthrough technologies such as hydrogen injection and CCUS (Carbon Capture, Utilization, and Storage). Additionally, developing circular revenue models and ensuring adequate scrap availability will play crucial roles in accelerating the transition to low-emission steel production.