Decarbonisation Gamble

Hydrogen-based steelmaking could cut emissions by 97 per cent, while renewable-powered electric arc furnaces could reduce them by 88 percent. Yet progress has been slow: only a handful of large-scale green hydrogen projects have been sanctioned so far, despite the enormous scope for industrial application. High costs, limited electrolyser manufacturing capacity, and infrastructure gaps~ such as inadequate pipelines and storage facilities ~ continue to stall momentum. Europe and China are already building hydrogen hubs, leaving India at risk of falling behind

- 

India’s steel industry is poised for exponential growth, targeting 300 million tonnes of production by 2030.

Yet this ambition collides with a stark reality: coal-heavy technologies drive emissions of 2.6 tons of CO2 per ton of crude steel, far above the global average of 1.92. With steel accounting for 12 per cent of India’s total greenhouse gas emissions, decarbonisation is no longer a choice, it is a strategic necessity. The sector is at the crossroads, and India’s decarbonisation imperative is unfolding in the middle of an unimaginably shifting global trade order.

Prime Minister Modi has repeatedly expressed confidence that steel will remain the “skeleton of modern economies,’ powering skyscrapers, highways, shipping, and industrial corridors. His optimism underscores the sector's centrality to India’s growth story. For this confidence to translate into global competitiveness, India must urgently accelerate its clean energy transition.

India’s per capita steel consumption, currently 98 kg, is projected to rise to 160 kg by 2030. This expansion underpins industrial maturity, urbanisation, and economic progress. Steel contributes nearly 3 per cent to GDP and sustains a million livelihoods. It is the backbone of skyscrapers, highways, shipping, and industrial corridors. Yet growth without sustainability risks exclusion from the very markets India seeks to penetrate. In today’s trade regime, carbon is currency ~ and India must learn to spend wisely.

Recent trade developments underscore the urgency of India’s steel transition:

EU-India FTA (2026): The landmark agreement opens unprecedented market access, covering 99% of exports by trade value. But Europe's Carbon Border Adjustment Mechanism (CBAM) will penalize high-emission steel. Indian producers must align with EU benchmarks or face tariffs that erode competitiveness. The FTA is both opportunity and warning: access is conditional on decarbonisation.