Decarbonising India’s Steel Industry — Green Steel, EU CBAM Impact and Environmental Jurisprudence

CURRENT AFFAIRS | MARCH 2026

India’s Steel Sector — Scale and Carbon Challenge

India is the second largest steel producer globally after China, with annual crude steel production exceeding 140 million tonnes. The National Steel Policy, 2017 targets 300 million tonnes capacity by 2030-31 — effectively doubling current output. However, this industrial ambition collides directly with India’s climate commitments: the steel sector accounts for approximately 10-12% of India’s total greenhouse gas emissions, making it the single largest industrial emitter after the power sector.

The dominant production route in India remains the blast furnace-basic oxygen furnace (BF-BOF) pathway, which relies heavily on metallurgical coal. This coal-intensive process generates approximately 2.3-2.5 tonnes of CO2 per tonne of crude steel — substantially above the global average of 1.89 tonnes. The challenge, therefore, is to simultaneously expand steel production (essential for infrastructure development and urbanisation) while dramatically reducing per-unit emissions.

EU Carbon Border Adjustment Mechanism (CBAM)

The European Union’s CBAM, which entered its full implementation phase in January 2026, represents the most significant trade-climate policy intersection in decades. CBAM requires EU importers to purchase carbon certificates corresponding to the embedded emissions in imported goods — effectively extending the EU’s Emissions Trading System (ETS) carbon price to imports of steel, aluminium, cement, fertilisers, electricity, and hydrogen.

For India, the implications are substantial. The EU is a significant export market for Indian steel products. Under CBAM, Indian steel exporters will face an additional cost burden proportional to their carbon intensity — estimated at EUR 50-100 per tonne of steel, depending on the ETS carbon price prevailing at the time of importation. This creates a direct financial incentive for decarbonisation and risks rendering carbon-intensive Indian steel uncompetitive in European markets.

Decarbonisation Technologies

1. Electric Arc Furnace (EAF) Route

EAF technology uses recycled scrap steel as feedstock, heated by electric arcs. It reduces emissions by 60-70% compared to the BF-BOF route and is electricity-based, allowing integration with renewable energy sources. India currently operates approximately 30% of its steel capacity through EAF, with scope for significant expansion as scrap availability increases.

2. Hydrogen Direct Reduced Iron (H-DRI)

H-DRI represents the frontier decarbonisation technology. It replaces coal/coke with green hydrogen as the reducing agent, producing water vapour instead of CO2. Sweden’s HYBRIT project and ArcelorMittal’s Hamburg facility have demonstrated commercial-scale feasibility. India’s National Green Hydrogen Mission (Rs 19,744 Crore) provides the policy framework for green hydrogen production that could supply H-DRI steelmaking.

3. Carbon Capture, Utilisation and Storage (CCUS)

CCUS captures CO2 emissions from industrial processes for utilisation (in enhanced oil recovery, building materials, or chemicals) or permanent geological storage. While not a zero-emission solution, CCUS serves as a critical transitional technology for existing BF-BOF capacity that cannot be immediately replaced.

Environmental Jurisprudence — The Legal Framework

India’s environmental jurisprudence provides a robust legal basis for compelling industrial decarbonisation:

In MC Mehta v. Union of India (1987) — the Oleum Gas Leak case — the Supreme Court established the doctrine of absolute liability for enterprises engaged in inherently dangerous or hazardous activities. Unlike strict liability under Rylands v. Fletcher (1868), absolute liability admits no exceptions — the enterprise is liable regardless of whether it exercised due diligence. This principle directly applies to steel plants that cause environmental damage through emissions.

In Vellore Citizens Welfare Forum v. Union of India (1996), the Supreme Court incorporated the precautionary principle and polluter pays principle into Indian environmental law as part of Article 21. The Court held that these principles are essential features of sustainable development and must guide industrial policy.

The Environment Protection Act, 1986 empowers the Central Government to set emission standards for industries, including the steel sector. The National Green Tribunal (NGT), established under the NGT Act, 2010, has jurisdiction to adjudicate environmental disputes and has actively enforced emission norms against polluting industries.

India’s Climate Commitments

India’s updated Nationally Determined Contributions (NDCs) under the Paris Agreement include achieving net zero emissions by 2070 (announced at COP26, Glasgow), with interim targets of 45% reduction in emissions intensity of GDP by 2030 and 50% cumulative electric power installed capacity from non-fossil fuel sources by 2030. Decarbonising the steel sector is indispensable for meeting these targets.

Way Forward — Balancing Growth and Sustainability

India’s steel decarbonisation pathway must balance industrial growth imperatives with climate obligations. A phased approach — expanding EAF capacity in the near term, scaling up H-DRI as green hydrogen costs decline, and deploying CCUS for legacy BF-BOF plants — offers the most pragmatic route. Simultaneously, India must ensure that international carbon border mechanisms do not unfairly penalise developing countries that bear disproportionately lower historical responsibility for cumulative emissions, invoking the principle of Common But Differentiated Responsibilities (CBDR) enshrined in the UNFCCC framework.

Source: UPSC Essentials, The Indian Express — March 2026

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