CEEW analyses reveal that by adopting advanced technologies like waste-heat recovery and energy-efficient drives and controls, an 8-25% reduction in steel emissions and a remarkable 32% cut in cement emissions can be achieved without affecting prices
India's economic juggernaut, driven by its steel and cement sectors, is at a pivotal crossroads: a staggering INR 47 lakh crore (USD 627 billion) in additional capital expenditure (CAPEX) will be required for them to achieve the ambitious target of net-zero carbon emissions.
This revelation comes from pioneering research by the Council on Energy, Environment, and Water (CEEW), supported by BP, the integrated energy giant India faces a daunting challenge as the world's second-largest producer of steel and cement. Both sectors are notorious for their carbon-intensive processes, categorising them as 'hard-to-abate' industries.
The CEEW's ground-breaking study, the first of its kind, quantifies the monumental cost of decarbonising these sectors. An additional INR 1 lakh crore annually in operational expenditure (OPEX) is imperative for the journey to net zero.
However, there's a glimmer of hope in this challenging scenario. The CEEW analyses reveal that by adopting advanced technologies like waste-heat recovery and energy-efficient drives and controls, an 8-25% reduction in steel emissions and a remarkable 32% cut in cement emissions can be achieved without affecting prices. Even more striking, a 33% reduction in the combined carbon emissions of steel and cement can be realised with just 8.5% of the total CAPEX and 30% of the extra annual OPEX, all while bypassing the need for carbon capture and with a steady supply of alternative fuels and raw materials.
The CEEW's assessment spotlights the stark reality: the Indian steel industry emitted a colossal 297 million tonnes of CO₂ during the 2021-22 period in crude steel production. With an average emission intensity of 2.36 tCO₂/tcs (compared to the world average of 1.89 tCO₂/tcs), it faces escalating costs as emission limits tighten. Depending on factors like production route, technology, and the cost of carbon capture, achieving near net-zero steel could be a daunting 40-70% more expensive than current costs. The key here lies in the nascent Carbon Capture, Utilization, and Storage (CCUS) technology, which holds the potential to slash up to 56% of emissions from the sector but requires rigorous testing before implementation.
The Indian cement industry, despite its energy efficiency, wrestles with carbon emissions inherent in the production process, notably due to limestone processing. The CEEW's assessment indicates that in 2018-19, this sector released 218 million tonnes of CO2 while producing 337 million tonnes of cement. Although carbon management mechanisms can significantly abate emissions, their cost is a significant hurdle. Alternatives like energy efficiency, using alternative fuels and raw materials, and reducing clinker factor appear more financially viable. The study highlights that around 50% of cement plants in India require access to CO2 pipelines for carbon capture and storage, with potential construction using existing natural gas pipeline rights-of-way.
To propel these industries toward net-zero emissions, the CEEW study recommends adopting state-of-the-art energy-efficient technologies to cut emissions while keeping costs in check. Furthermore, incentivising renewable energy is paramount, with lower or zero transmission charges at central and state levels. India's government should proactively develop a policy framework and fast-track the creation of a CCUS ecosystem to mitigate over half of the emissions from existing steel and cement plants. Hydrogen, a pivotal player in this transformation, should be central to the next phase of the National Green Hydrogen Mission's agenda.