Institute For Energy Economics And Financial Analysis Warns Gap Between Targets And Action Could Slow India’s Steel Decarbonisation

A growing gap between the decarbonisation targets announced by Indian steel companies and the actual steps being taken to achieve them could have long-term consequences for the sector. If this gap continues, it may lock companies into high-emission technologies for decades, slow down their transition to net zero, and weaken their competitiveness in a global market that is increasingly focused on low-carbon production. A recent report by Institute for Energy Economics and Financial Analysis, titled Decarbonisation readiness in India’s steel sector, highlights this concern.

The study finds that while many Indian steel companies have adopted climate goals aligned with the Paris Agreement, their progress in building the necessary operational systems, adopting new technologies, and securing financial support has been limited. The report emphasizes that the next decade is critical, as decisions made now by companies, investors, and policymakers will shape the future of steel decarbonisation in India. According to Dr. Saurabh Trivedi, India’s steel industry is at a turning point. As the world’s second-largest steel producer, India is seeing continued growth in steel demand, unlike some other regions where demand has stabilized or declined.

This means that the choices Indian companies make today will have a significant impact not only on the country’s emissions but also on global steel sector emissions in the coming decades. The report evaluates the readiness of ten steel companies—seven from India and three global players—by examining how well their emission reduction targets align with their actual strategies, operational capabilities, and financial planning. The Indian companies assessed include JSW Steel, Tata Steel, Steel Authority of India Limited, Jindal Steel, Rashtriya Ispat Nigam Limited, Jindal Stainless Limited, and Godawari Power and Ispat Limited. These were compared with global companies such as ArcelorMittal, POSCO, and Nippon Steel.

The findings show that although five of the seven Indian companies have set net-zero targets aligned with the Paris Agreement for 2050, their overall readiness remains relatively low. In fact, emissions intensity for most Indian companies has increased over the past three years, while several global peers have managed to reduce theirs. This indicates that while ambition exists, it has not yet translated into effective implementation. Soni Tiwari points out that although some leading companies are beginning to explore cleaner technologies, there has been little movement in terms of actual capital investment.

Without significant funding directed toward low-carbon technologies, emissions are likely to continue rising, especially as the sector expands. One of the key structural challenges identified in the report is the continued reliance on blast furnace technology. A typical blast furnace operates for 20 to 25 years, and relining can extend its life by another 15 to 20 years. In India, around 43 million tonnes per annum of blast furnace capacity is due for relining before 2030. If these furnaces are refurbished instead of replaced with cleaner alternatives, they will continue emitting high levels of carbon for decades, making it harder to meet climate goals.

This situation could also expose Indian steel producers to increasing global pressures. Measures such as carbon border taxes, green procurement requirements, and stricter investor expectations for credible transition plans are becoming more common. Companies that fail to reduce emissions may find themselves at a disadvantage in international markets. Addressing these challenges will require strong and coordinated action from the government. Globally, around USD 24 billion has already been invested in steel decarbonisation, much of it supported by public funding.

This highlights an important reality: green steel technologies are not yet financially viable without policy support. In India, tools such as credit guarantees, contracts for difference, and green public procurement policies will be essential to encourage investment and reduce risks for companies. Tanya Rana stresses that time is limited. The success of the steel sector’s transition will depend not on the targets companies announce, but on the investments they make and the technologies they adopt. At present, the sector still has significant progress to make if it wants to align its growth with long-term climate goals.