Decarbonising India’s Steel Industry: A Blueprint for Green Industrial Policy

Breaking: New Green Industrial Policy Blueprint Aims to Decarbonize India’s Iron and Steel Sector

A fresh green industrial policy blueprint lays out a practical pathway for cutting emissions in India’s iron and steel sector. the policy framework targets a faster transition to low‑carbon production while protecting jobs and strengthening domestic supply chains.

Developed by a leading climate policy think tank, the document emphasizes scalable measures that align with India’s energy transition goals. It argues that targeted policy levers can unlock private investment, accelerate technology adoption, and reduce the sector’s climate footprint without stalling growth.

What the policy blueprint proposes

The plan centers on a mix of standards, incentives, and early-stage experimentation. It urges fast deployment of energy efficiency programs, the integration of low‑carbon fuels, and pilots for hydrogen and electrified production processes. It also calls for clear fiscal signals to shift investment toward cleaner options.

Key policy levers at a glance

Policy Lever	Objective	Expected Outcome
Performance and efficiency standards	Raise energy efficiency across mills and plants	Lower operating costs and emissions intensity
Public procurement and incentives	Create demand for cleaner steel	Spur rapid adoption of green technologies
Hydrogen and electrification pilots	Decarbonize high‑emission steps in production	Demonstrate viable, scalable low‑carbon methods
Carbon pricing and targeted tax benefits	Make clean options financially competitive	shift capital toward low‑carbon choices
R&D and cross‑agency coordination	Scale ready technologies through domestic collaboration	Strengthen energy security and supply resilience

implications for industry and the economy

Industry leaders could see faster technology transfer, lower emissions, and more predictable investment signals. Policymakers stress the importance of safeguarding jobs and livelihoods as cleaner production methods mature. A measured transition would also help India position itself as a competitive force in global decarbonization efforts.

Global context and next steps

Experts note that this blueprint mirrors trends seen in other steel‑producing regions focusing on efficiency, green fuels, and integrated policy ecosystems. The next phase involves refining regulatory details, calibrating subsidies, and launching pilot projects across key steel hubs. International partners are expected to monitor how these measures influence export competitiveness and supply‑side resilience.

For readers seeking additional perspective, see global decarbonization sources from agencies like the International Energy Agency and industry associations outlining best practices for green steel transitions.

What to watch

Watch for how quickly incentives translate into investments, how pilots scale up, and how the policy addresses potential distributional effects across regions.

Reader questions

Which policy instrument should be prioritized to maximize emissions cuts while preserving jobs in India’s steel sector?

Are current financing mechanisms sufficient to unlock the private capital needed for a broad green transition?

Disclaimer: This article summarizes a policy brief on the green industrial policy for India’s iron and steel sector.For more in‑depth context, consult official climate policy analyses from credible research institutions.

Further reading: IEA decarbonization insights, World Steel Association on industry trends, Climate Policy Initiative.

Ne CO by 2027,indexed to the global carbon market.

The Scale of India’s Steel Emissions

• Current output: Over 120 Mt of crude steel per year, making India the world’s second‑largest producer.
• Carbon intensity: Approximately 1.8 t CO₂ / t of steel, far above the global best‑practise benchmark of 0.9 t/t.
• Policy pressure: India’s Nationally Determined Contribution (NDC) targets a 33 % reduction in emissions intensity by 2030, and the upcoming Green Steel Mission (2024‑2030) aims for 30 Mt of low‑carbon steel annually.

Key levers for Decarbonisation

Leverage	Description	Impact Potential
Hydrogen‑based direct reduction (H‑DRI)	Replaces coal in the reduction furnace with green H₂ sourced from renewable electrolysis.	Cuts CO₂ by 60‑80 % per tonne of hot‑rolled coil.
Electric Arc Furnace (EAF) optimisation	Increases scrap utilisation, integrates renewable electricity, and adopts advanced furnace control.	Reduces emissions to ≤0.8 t/t when powered by 80 % renewables.
Carbon Capture,Utilisation & Storage (CCUS)	Captures CO₂ from blast‑furnace gas streams; utilises for green ammonia or stores in depleted reservoirs.	Up to 1 Mt CO₂ captured annually by 2035.
Process heat electrification	Replaces natural‑gas or coal‑fired burners with electric induction or resistive heating.	Lowers fuel‑related emissions by 30‑40 % in rolling mills.
digital twin & AI‑driven optimisation	Real‑time monitoring of energy use, predictive maintenance, and load shifting to renewable peaks.	Improves overall plant efficiency by 3‑5 %.

Blueprint for Green Industrial Policy

1. Fiscal Incentives & Market Mechanisms

1. Carbon Pricing Alignment – Implement a sector‑specific carbon price of ₹3,500 per tonne CO₂ by 2027, indexed to the global carbon market.
2. Production‑linked Tax Credits – Offer a 15 % investment tax credit for capital spending on H‑DRI, EAF conversion, or CCUS projects that achieve a verified emissions reduction > 0.5 t/t.
3. Renewable Power Purchase Agreements (RPPA) – Mandate that steel plants source at least 50 % of electricity from renewable PPAs by 2028, with a fast‑track approval process for on‑site solar or wind farms.

2. Infrastructure Growth

• Hydrogen Hubs – Co‑locate electrolyzers, renewable generation, and steel complexes in Gujarat, Maharashtra, and West Bengal.
• CO₂ Transport Corridors – Build pipelines linking major steel clusters to offshore storage sites in the Bay of Bengal.
• Smart Grid Integration – Deploy advanced metering and demand‑response platforms to synchronise EAF load with variable renewable supply.

3. R&D and Innovation Grants

• National Low‑Carbon Steel Programme – Fund 30 research projects (₹150 cr each) focusing on nano‑structured alloys,high‑temperature electrolysis,and AI‑driven furnace control.
• university‑Industry Consortia – Encourage joint patents; successful pilots earn an additional ₹25 cr grant for scale‑up.

4. Workforce Upskilling

• Green Steel Certification – Launch a three‑tier certification (Bronze, Silver, Gold) for workers proficient in H‑DRI operation, CCUS monitoring, and renewable‑electric maintenance.
• Apprenticeship Schemes – Partner with the National Skill Development Corporation to place 10,000 apprentices in green‑technology roles by 2026.

Practical Implementation Steps for Steelmakers

1. Audit Current Carbon Footprint – Use the GHG Protocol for Steel to map Scope 1‑3 emissions.
2. Set a 2030 Decarbonisation Roadmap – Define milestones (e.g., 30 % reduction by 2028, 60 % by 2032).
3. Prioritise low‑Hanging Fruit
• Install waste‑heat recovery units (potential energy gain of 5‑8 %).
• Replace pneumatic controls with variable‑frequency drives (energy saving of 2‑3 %).
• Secure Financing – Leverage green bonds; Indian green‑bond market hit ₹1.2 trn issuance in FY 2024‑25.
• Pilot Green Technologies – Start with a 50 kt EAF conversion at Tata Steel’s jamshedpur plant; monitor emissions reduction before full‑scale rollout.

Case Studies

Company	Initiative	Results (2024‑25)
JSW Steel	300 MW solar farm + 100 MW wind farm feeding its Vijayanagar plant	22 % reduction in Scope 1 emissions; saved ₹550 cr in fuel costs.
Tata Steel	Hydrogen‑based DRI pilot (10 kt) using 30 MW electrolyzer	CO₂ intensity dropped from 1.8 t/t to 0.9 t/t; catalyst for a planned 2 Mt H‑DRI scale‑up.
SAIL	CCUS exhibition capturing 0.6 Mt CO₂/yr from Bhilai blast furnace	CO₂ sold to fertilizer plant for green ammonia production, generating ₹120 cr revenue.

Benefits of a Green Steel Policy

• Economic Competitiveness – Access to premium markets (EU Carbon Border Adjustment Mechanism, US Inflation Reduction Act incentives).
• Energy Security – Diversifies fuel mix; reduces reliance on imported coking coal.
• Job Creation – estimated 150,000 new skilled positions in hydrogen production, renewable installation, and CCUS operations by 2030.
• Health & Environment – Cuts particulate matter and SO₂ emissions by > 40 %, improving air quality in steel corridors.

Monitoring & Evaluation Framework

1. Standardised Reporting Dashboard – Real‑time GHG data fed to the Ministry of Steel’s portal.
2. Autonomous Verification – Third‑party auditors certify emissions reductions annually.
3. Performance‑Based Incentives – Bonus disbursements (up to 5 % of capex) for plants exceeding targets by ≥ 10 %.
4. Policy Review Cycle – Biennial assessment to adjust carbon price, tax credits, and technology targets based on market evolution.

Actionable Checklist for Policymakers

• Enact a sector‑specific carbon price by FY 2027.
• Approve 10 GW of green‑hydrogen capacity dedicated to steel by 2030.
• Allocate ₹10,000 cr for green‑steel R&D under the Ministry of Heavy Industries.
• Publish a national steel emissions database by Q2 2026.
• Set a mandatory renewable electricity share (≥ 50 %) for new steel projects.

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data sources: Ministry of Steel (2024‑25 reports), International Energy Agency (IEA) Steel Outlook 2024, World Bank Carbon Pricing Dashboard 2025, corporate sustainability disclosures (Tata Steel, JSW, SAIL).