Building India's Future with Lower Carbon Emissions: The Untapped Potential of Recycled Steel

By Sai Sri Harsha Pallerlamudi, Zoya Zakai, Tarun Garg – RMI India Foundation Dr. Prasad Marepalli, Aun Abdullah – Lodha

India is currently experiencing an unprecedented boom in infrastructure and real estate development. As we build the future, materials like concrete and steel are at the forefront of construction. However, these two materials alone contribute to between half and two-thirds of the total embodied carbon emissions in the construction sector. Unlike operational carbon, which can be reduced over time through energy-efficient practices and retrofitting, embodied carbon is locked into the building at the time of construction and remains unchanged throughout its lifespan. This makes reducing embodied carbon a critical challenge that requires immediate and comprehensive action.

One immediately actionable and promising approach to reducing embodied carbon is increasing use of recycled steel. The construction and infrastructure sector in India consumes more than 68% of the steel produced [1] . However, on average only about 10-25% of scrap is used for the production process through varying steelmaking pathways [1,2,3] . This proportion is expected to grow significantly, potentially becoming the primary method of steel production by the mid-21st century. In many developed countries, with a formalised scrap ecosystem, a large portion of steel production already relies on recycled materials. For example, in the United States up to 70-90% of its steel production comes from recycling due to better access to scrap [2,4] .

While the discourse on decarbonizing the steel industry is promising, it remains particularly weak regarding the production of recycled steel. Although hydrogen-based steelmaking holds great potential for the future, current infrastructure, technological, and economic hurdles will delay its widespread adoption. In the meantime, strategically integrating higher percentages of scrap into steelmaking can accelerate the transition to a circular and low-carbon steel industry, ensuring immediate uptake. The use of every ton of scrap can potentially save 1.1 tons of iron ore, 630 kg of coking coal and 55 kg of limestone[1]. Additionally, specific energy consumption can be reduced by 16- 17%, while water consumption and greenhouse gas emissions can be reduced by 40% and 58% respectively[1]

As a developer and a buyer committed to sustainability, we have taken a closer look at our supply chain. This work, carried out by our Net Zero Urban Accelerator - a partnership initiative with RMI India Foundation - uncovered important insights into the recycled steel sector for us. These insights suggest that we need a collaborative, multi-stakeholder approach to tackle the challenges and unlock the full potential of recycled steel for reducing carbon emissions. Key areas for intervention include:

1. Understanding the Scale and Challenges of Recycled Steel Production

Recycled steel production in India, particularly through induction furnaces, is largely carried out by smaller manufacturers (about 31%) [1] . These smaller manufacturers often lack the resources and incentives to invest in advanced technologies that could reduce emissions because the market and current regulations do not demand strict emissions standards. Moreover, they encounter significant barriers concerning capital investment and technical expertise required for process innovation and improvement.

2. Improving the Use of Raw Materials

The production of recycled steel, especially for small manufacturers, primarily relies on three raw materials: scrap metal, sponge iron, and electricity. However, there is considerable variation in how these materials are used. For instance, the proportion of scrap in the production process in our surveys is seen to vary widely between 30% and 80% among different manufacturers (as observed in surveys across our supply chain). This variation depends on factors such as seasonal availability, the informal nature of trade and price volatility of scrap. The cash flow imbalance from upfront scrap purchases can hinder the uptake of higher quantities of scrap for production. The cash market of scrap and the ability of major manufacturers to offer better rates add to the cost pressures for smaller- scale manufacturers. Additionally, the sourcing of sponge iron is inconsistent, with little focus on the emissions efficiency of the direct reduced iron (DRI) process used to produce it. In India, 80% of sponge iron produced is coal based [1] , which is a major contributor to stage A1 direct emissions, and transitioning it to a gas-based method could potentially reduce emissions by up to 60%.

3. Optimizing Electricity Use

Electricity consumption in recycled steel production represents a significant opportunity for reducing carbon emissions. Currently, over 70% of Stage A3 emissions in this sector are due to electricity use. However, the subsidized cost of electricity and additional incentives for maintaining high load factors often render cleaner, more sustainable energy sources economically unviable for these smaller producers. Addressing this imbalance could unlock substantial carbon savings. Furthermore, adopting energy-efficient technologies like direct hot charging, technologies like THERMEX and PQS for quenching and tempering, and multi-strand slit rolling technology can further enhance process efficiency and reduce energy consumption.

4. Embracing Circular Economy Practices

Adopting circular economy principles could further reduce the environmental impact of recycled steel production. For example, implementing waste heat recovery, and waste recovery techniques such as reusing slag and sand, and capturing valuable materials like zinc through improved fume extraction, can better utilize the by-products of production and increase revenue. It is ironic that while the recycled steel sector is often seen as a "scavenger" of materials, it still contributes significantly to pollution. By rethinking waste management, this sector could enhance its role in promoting sustainability.

Figure 1: While assessing their steel supply chain the buyers can start insisting on information on these 6 parameters to drive demand for low carbon recycled steel

5. Emission intensity Declarations Across Steelmaking Pathways and Processes

Environment Product Declarations (EPDs) and Life Cycle Assessments (LCAs) are essential for evaluating the environmental impact of supply chains. Analysing process emissions, from raw material processing to finished steel production, can help identify opportunities for emissions reduction and inform more sustainable practices.

As India’s construction and infrastructure sectors continue to grow, the imperative to reduce carbon emissions has never been more urgent. To drive meaningful change in the recycled steel sector, it is essential that all stakeholders—regulators, buyers, sellers, utilities, and academic institutions—work together. By developing best practices, setting standard specifications for buying recycled steel, and enacting supportive regulations, we can help guide this vital industry towards a low-carbon future. The path to a sustainable future is not just in ground-breaking technologies but also in optimizing and scaling up existing processes, like recycled steel production, to reduce our overall carbon footprint. By focusing on these areas, we can ensure that India’s growth is not only rapid but also sustainable, creating a future that balances development with environmental responsibility.

Partner with us to drive the change

To drive meaningful change in the recycled steel sector, it is essential that all stakeholders – regulators, buyers, sellers, utilities and academic institutions – work together. By developing best practices, setting standard specifications for buying recycled steel and enacting supportive regulations, we can help guide this vital industry toward a low-carbon future. The path to a sustainable future is not just in ground-breaking technologies but also in optimising and scaling up existing processes like recycled steel production, to reduce our overall carbon footprint. By focusing on these areas, we can ensure that India’s growth is not only rapid but also sustainable, creating a future that balances development with environmental responsibility.

References

1. Ministry of steel. (2023). Annual report 2022-23.

2. Kochhar, Karan. (2023). Towards a circular steel industry. International Renewable Energy Agency.

3. Press Information Bureau. (2023). Press release following IMRC 2023.

4. American institute of steel construction. (n.d.). Recycling in American steel. Retrieved August 29, 2024, from AISC Sustainability