India’s Steel Giants Risk Locking in 12 Billion Tonnes of CO₂
Blast furnace expansion plans threaten India’s NDC pledge to reach net zero by 2070 and risk punitive tariffs under the EU’s Carbon Border Adjustment Mechanism
Measuring Transition: The Indian Steel Majors
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Expansion plans, climate targets and trade exposure in India’s steel sector.
This report examines how expansion plans by India’s leading steel producers threaten progress towards India’s national climate targets and expose exporters to EU carbon border charges. Co-authored by Carbon Transition Analytics and Carbon Tracker, the report synthesises four earlier studies on AMNS, JSPL, Tata, JSW Producers intend to lift capacity from 80 Mtpa today to 150 Mtpa by 2030 and nearly 250 Mtpa by 2040 – with over 200 Mtpa still tied to coal-based blast furnaces. With assets that run 20–25 years, units commissioned in the 2030s would lock in emissions well past mid-century unless retired early. Carbon capture and storage is unlikely to scale in time. Without a shift to lower-carbon routes, companies face mounting compliance costs abroad and put the country’s 2070 net-zero pledge at risk.
Key insights from the report:
- Up to 12 billion tonnes of CO₂ could be hard-wired if current expansion proceeds.
- Planned capex totals US$172bn, of which around 70% is aligned to high-risk, carbon-intensive projects with systemic lock-in.
- Based on today’s emissions intensities, costs under the EU Carbon Border Adjustment Mechanism (CBAM) could reach ~US$150/t in 2030, rising to ~US$300/t from 2034.
- Carbon capture and storage is unlikely to arrive at scale in time, with suitable sinks either too small, too far, or too late (basalt formations typically ~400 km from major plants and saline aquifers not expected until after 2050).
- Company exposure is uneven: JSPL appears most at risk given higher CO₂ intensity and EU-bound exports, while JSW Steel is moving fastest on abatement, targeting 10 Mtpa of hydrogen-based, electric-arc steelmaking capacity.
- The most credible way to reduce risk is to scale hydrogen direct reduction with electric arc furnaces (HDR-EAF), supported by modest buyer premiums and transition finance tied to credible, time-bound plans; by 2030, optimised green routes may be cheaper than purchasing EU ETS carbon.
Quotes
“The CBAM tariff on exports to the EU acts as an incentive to switch to low carbon production for these exports in a similar way to achieving a green premium on the sale of low carbon steel”, notes report co-author Carole Ferguson. “Based on our analysis, optimal configurations of green steelmaking routes in 2030 may come with a lower cost of abatement than the cost of carbon under the EU ETS.”
“This process would benefit from private and public procurers of green steel willing to pay a premium”, according to report lead Paul Griffin. “Transition financing could play a role in scaling up the adoption of low carbon steel processes – but only if companies can provide the credible transition plans required to access it."