From shifting to gas-based power plants to investing in green energy technologies, India’s top metal companies are helping India inch closer to the COP-26 target of achieving net-zero emissions by 2070.
“Sustainability is no longer an option for big companies today. If companies don’t take it seriously now, it will start affecting the profitability and valuations,” said Bank of America’s Head of Research, Amish Shah. At the vanguard of such dedicated efforts are large resources and process-plant driven industries, such as steel. We are in collaboration with Carbon Clean Solutions and several start-ups exploring decarbonisation technologies. In the short term, we are trying to use more scrap in our current steelmaking units to reduce carbon footprint,” said a Tata Steel spokesperson.
JSW Steel has earmarked Rs 557 crore to be spent on Best Available Technologies (BAT) for environmental sustainability during FY 2020-21. The company is further planning to invest around Rs 10,000 crore in the coming decade to achieve the stated carbon reduction target by FY 30. “We have invested in gas-based power plants to utilize waste gases generated from steel operations, thereby reducing coal consumption. JSW also has steam generation from waste heat recovery at sinter plants,” said Prabodha Acharya, Chief Sustainability Officer JSW Group.
Yet another highlight of the COP-26 event was the coal debate. Coal accounts for around 55% of India’s energy needs. The coal ministry data showed that commercial primary energy consumption in India has grown about 700% in the past four decades. The current per capita commercial primary energy consumption in India is about 350 kg/year, well below that of developed countries.
“For ironmaking, AM/NS India uses the advanced Direct Reduced Iron (DRI) technology that emits lower CO2 than conventional methods of steelmaking…Thus far, we have been successful in reducing our CO2 emissions per ton by 32% since 2015 in India,” said Dilip Oommen, CEO of AM/NS India. India’s largest aluminium maker Hindalco Industries has committed to net carbon neutrality by 2050. “Hindalco’s US Subsidiary Novelis is the world’s largest recycler of aluminium with a current recycling capacity of 2.5 million tons per annum,” the company said in an investor presentation.
Meanwhile, Anil Agarwal-led Vedanta Ltd is investing in new green businesses to leverage attractive adjacencies like green metals, renewables, green hydrogen, recycling etc. “Vedanta has set up the world’s first ESG Academy for in-house competency creation of top 100 leaders and we are also creating a Vedanta sustainability venture fund to support and harness external innovation,” said the company while announcing its September quarter results. With an abundant supply of iron ore in India, the blast furnace route has been the preferred technology in steel output.
As per the 2017 National Steel Policy, the Ministry of Steel has taken a target of 300 MnTPA crude steel capacity by 2030, with a finished steel production target of 230 MnTPA. And several steelmakers continue to invest in blast furnaces to meet the growing steel production and demand in India. “We are aware of the risks associated with building a blast furnace post FY25, as these assets will have a life of 30 to 40 years….In the meantime, we are investing in CCU/S for capture and usage of carbon being emitted from blast furnaces,” said a Tata Steel spokesperson.
Companies such as AM/NS with access to global standards and technology plan to source power through renewable resources for their new expansions. Given our long-term expansion plans for a capacity of 30 MTPA, our strategy covers an incremental power requirement of 2000 MW through renewable sources, including partly through Solar photovoltaics (Solar PV route),” Oommen said.
Global Pressure
Government and corporate net-zero commitments are pushing the steel industry to cancel out its emissions by 2050. Efforts to decarbonize steel production are central to the net-zero aspirations of China, Japan, Korea and the European Union. China, which is the largest steelmaker in the world, has curbed steel production massively.
Media reports said that a notice issued on September 2 asked for feedback from steelmakers in 28 cities, including Beijing and Tianjin, and other industrial hubs in Hebei and Shandong provinces. Tangshan, the biggest steelmaking hub, cut crude steel production by 8.8 per cent, or 21.7 million tons, this year. In April, the EU pledged to cut carbon emissions by at least 55 per cent by 2030, compared with 1990 levels and is coming up with the world’s first carbon border tax. The tax aims to levy a tax on non-EU firms exporting to the EU.
Green Hydrogen
“Though Hydrogen can be used for partial replacement of coke in the current decade, First H2 DRI-EAF plant on full-scale operations could be possible in India by 2035,” said JSW’s Acharya However, Hydrogen is still not feasible for businesses in India.
Naveen Jindal-led Jindal Steel and Power is also working on a Hydrogen project through Syngas which is used to reduce the Iron to produce DRI. It brings down the CO2 emission levels. “There are a couple of technologies India has adopted to use syngas to reduce coal or coke consumption. We have tested this in our plants, and we see that it reduces the use of coke by 15%,” said JSPL’s managing director, V.R.Sharma. The company is planning to introduce syngas to all its blast furnaces by March FY2022
Green Finance
“As many economies aim to cut carbon emissions to net-zero in the next few decades, more metals and mining companies are expected to issue green bonds,” said Sean Kidney, CEO of Climate Bond Initiative in a report by S&P Global. Indian steelmakers are looking at Green Bonds as an attractive option. In 2021, JSW Steel issued a Sustainability Linked Bond in hard currency. JSW raised a total of USD 1 billion in the USD Bond markets through a bond issuance which was subscribed by high-quality institutional investors across Asia, the Middle East, Europe, and the US.
This article is part of a series on sustainability in association with BCG. BCG did not play any role in editorial decision-making.
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The initiative is expected to help NTPC demonstrate an environment-friendly technology to produce green power and chemical. It is planned under the theme of “NETRA Green Campus” where the campus will have round-the-clock green power from Solar PV, battery storage, Hydrogen and RDF.
The company did not disclose the quantum of investment being planned but said the two firms will jointly pursue business opportunities in renewable energy space.