High Costs & Limited Technology To Slow India’s Green Steel Transition: ICRA

ENA Sectors 2026-01-22 16:29:23 New Delhi, Jan 22 (KNN) Indias move towards low-carbon green steel is expected to be slow and incremental, held back by high costs and limited availability of mature technologies, rating agency ICRA said in its latest assessment. High Emissions, Limited Green Readiness ICRA estimates that Indian steelmakers currently emit about 2.5 tonnes of carbon dioxide per tonne of steel, around 12 per cent higher than the global average for the coal-based blast furnace basic oxygen furnace (BF-BOF) route. While the Green Steel Taxonomy introduced in December 2024 sets graded emission benchmarks, most domestic producers remain well above even the highest thresholds defined as green. Coal-Based Capacity to Dominate Girishkumar Kadam, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA, said, The planned capacity additions of about 80 85 million tonnes (mt) in India by 2030-31 are heavily skewed towards the coal-based BF-BOFiiiroute, the share of which will increase from ~45 per cent currently to roughly 51 per cent by 2030-31, reflecting a high carbon intensity in the medium term. Efficiency and Renewables to Drive Near-Term Gains The domestic steel industrys near-term decarbonisation will mainly rely on operational efficiency gains and higher renewable energy adoption, which is expected to result in ~19 per cent reduction in emission intensity by 2029-30 and would bring the sector average down to roughly 2.0 tCOâ per tonne by the end of this decade. A major part of this reduction is expected from renewable energy integration and process optimisations, Kadam added. Steelmakers have announced around 9 GW of captive renewable capacity, which could cut emissions by about 13 per cent for BF-BOF plants and up to 22 per cent for DRI-based units. Other steps such as higher scrap usage, waste-heat recovery and energy efficiency will also help, though scrap shortages limit the expansion of electric arc furnace capacity. Green Hydrogen Remains Costly Deeper decarbonisation through hydrogen-based steelmaking faces a major hurdle in the high cost of green hydrogen. ICRA said prices would need to fall to USD 1.5 1.6 per kg for hydrogen-based DRI routes to be viable, compared with current levels of over USD 3 per kg. Long-Term Outlook ICRA expects demand for green steel to rise beyond 2030, driven by stricter ESG norms, decarbonisation efforts by sectors such as automotive and infrastructure, and policy support. However, it said Indias green steel transition will depend on improvements in economics and technology readiness, making it a long-term goal rather than an immediate shift. (KNN Bureau) 44864 https://knnindia.co.in/news/newsdetails/sectors/high-costs-limited-technology-to-slow-indias-green-steel-transition-icra 2026-01-22 16:29:23 knnindia.co.in High Costs & Limited Technology To Slow India’s Green Steel Transition: ICRA