India eyes ₹15,000 crore budget support for green steel mission in bold move towards low-carbon economy

Officials told businessline, the corpus would look to include a PLI-type scheme whereby it pushes for incentivising low carbon emitting steelmaking, bring-in a mandatory procurement provision for such high-cost metal, among other thrust areas.  “The Ministry is looking to launch the Green Steel Mission with an estimated cost of ₹15,000 crore. And this is a part of the budget discussions that have been taken up,” an official said.  There have been some six to eight odd meetings across Ministries to firm-up the contours of the fund and the scheme. 

It was discussed that the budget considers a policy push towards protecting domestic steel makers by “imposing adequate safeguard measures” so that substandard steel imports stop, and mills are “protected against dumping of cheap sub-standard steel.”

India has been the first country to define green steel - where emissions during the metal-making process is lower than 2.2 per tonne of carbon dioxide per tonne of finished steel...The mission will include PLI (production linked incentive) for green steel, incentives for the use of renewable energy and further incentives to smaller producers as they transit to green steel (low carbon dioxide emitting metal) production. 

A public procurement policy, “to generate demand” for green steel - of upto 37-40 per cent in government projects - is being mulled too, as part of the policy thrust. “….to create demand for green steel by giving mandates to government procurement, including Ministries, PSUs and GoI funded projects,” a note reviewed by the businessline said. 

Incidentally, India’s steelmakers have pointed out that the capex into green steelmaking is almost double than that of electric arc furnace or blast furnace-based steelmaking. In such a case, there was a need to incentivise capex, while ensure “mandatory procurement of such costlier offerings.”

Against the regular investment of $1 billion needed for setting up a 1 million tonne per annum steel plant, setting up a green steel plant of one mtpa requires a capex of $2 billion-odd, sources said.

Incidentally, the budget proposals under discussion include putting in. Place a strategy for international cooperation.

While enhancing international tech collaborations (clean tech usage) seen as a possible way, the Ministry intends to push steel exports into newer markets. “There are some talk to create market for export of Indian steel,” said an official adding that traditional buyers like Europe and ME are either witnessing an economic slowdown, bringing in tariff barriers and also stiffer competition...

Discussions are on to “diversify raw material sources” – primarily tap new markets for coking coal sourcing - and making overseas investments – in coal assets (like ramping up production in Mozambique). Sourcing scrap for electric arc furnace method of steel making, is reportedly under consideration too.