As the European Union (EU) tightens its grip on carbon emissions through the Carbon Border Adjustment Mechanism (CBAM), India’s steel industry faces a critical juncture. The EU’s pioneering carbon border tax is designed to impose levies on imports of carbon-intensive products, including steel, to ensure a level playing field with domestic manufacturers. This move is a significant response to the alarming reality that India’s steel production emits 2.6 tons of CO2 per ton of steel—substantially above the global average of 1.85 tons.
With major European nations like Italy, Belgium, and the UK accounting for over 20% of India’s steel exports, the implications of CBAM could be dire. Industry estimates suggest that as much as 40% of these exports could be affected by 2034, threatening not just revenue, but the very survival of many steel producers. With the iron and steel sector responsible for about 12% of India’s total CO2 emissions, urgent action is essential. By 2050, emissions from this sector could escalate to 800 MtCO2 if current practices persist.
The path forward for Indian steelmakers lies in embracing renewable energy (RE). By 2030, a Renewable Purchase Obligation mandates that steel producers source around 43% of their energy from renewable sources. Transitioning to RE—whether through on-site solar installations or wind energy—presents a compelling opportunity for the industry to drastically cut emissions and avoid punitive tariffs. Although the initial investment may be steep, the long-term benefits include stabilised energy costs and enhanced competitiveness in the global market. Furthermore, the Indian Steel Ministry’s roadmap targets net-zero emissions by 2070, focusing on energy efficiency and resource optimisation in the short term. By adopting innovative technologies, such as direct-reduced iron (DRI) processes and electric arc furnaces, the sector can significantly reduce its carbon footprint.
However, the transition is not merely about compliance; it embodies a larger narrative of sustainability. Steelmakers must invest in carbon capture and utilise alternative fuels like hydrogen and coal bed methane to mitigate their environmental impact. Collaborations for power purchase agreements and renewable energy certificates could also facilitate this transformation. Ultimately, the shift to renewable energy is not just an environmental necessity but an emotional imperative—one that safeguards the livelihoods of millions who depend on the steel industry. By embracing sustainable practices, India’s steel sector can contribute to a greener planet while ensuring its own economic viability. The time to act is now; the stakes have never been higher.
