Lifting the technology veil: analysing technology requirements for decarbonising steel and cement sectors in India
Developing countries’ achievement of net zero goals depends on technology transfer and access, write Parth Kumar and Sangeeth Selvaraju.
A massive transition towards clean energy is underway in the global industrial sector. Steel and cement are considered hard-to-abate sectors (i.e. it is difficult to cut their greenhouse gas emissions) because of their major reliance on fossil fuels and limited financial and technical options for aligning with globally declared net-zero targets. The challenge becomes bigger for developing countries, encompassing the need for a just industrial transition.
In India, these sectors significantly contribute to Gross Domestic Product (GDP) and exports, and are core inputs for satisfying the growing economy, population and urbanisation.
India is the second-largest producer of crude steel (about 120 million tonnes) and cement (340 million tonnes) per annum, only behind China. Estimates suggest that, owing to rising demand, the country’s steel production capacity will surge to around 300 million tonnes by 2030, while its cement production capacity will increase to 660 million tonnes. The steel sector contributes approximately 5% and the cement sector 6% to India’s greenhouse gas emissions.
The technology used in these production processes is critical to determining whether these sectors will achieve their decarbonisation and net zero goals. Recent reports by the Centre for Science and Environment (CSE) estimate that emissions can be reduced by 64–79% in the steel sector and 42% in cement by 2030. However, technology and resource development, access and transfer will play a key role in achieving these reductions.
Developing countries have low research and development spending, especially in technology for cement and steel. As such, their achievement of net zero goals depends significantly on technology transfer and access.
But technology transfer from developed to developing countries has been a thorny issue since the adoption of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992. Limited progress has been made to ensure technology to reduce emissions is shared evenly.
Steel and cement R&D spending in India, European Union, Japan and China (2020–22)
* For general non-metallic mineral products.
** Steel R&D has been calculated summing the R&D expenditure of the top four companies in the sector: JSW, Tata, SAIL and Arcelor Mittal Nippon Steel.
*** China’s ferrous metals only.
Tech interventions for decarbonising India’s steel sector
To understand the technological requirements for decarbonising the steel industry in India, it is essential to identify the biggest source of emissions in the country’s steel sector.
CSE’s study on decarbonising India’s steel sector showed that, as of 2020–21, the steel produced from the blast furnace-basic oxygen furnace (BF-BOF) route contributed 42.7%, while the coal-based scrap/direct reduced iron with green hydrogen and electric arc furnace (scrap/DRI-EAF) route supplied 51.1% of the emissions from India’s steel sector.
The individual emission intensity of these two technology routes was also the highest compared with alternate routes. This clearly shows that the blast furnace and production of DRI from coal are the biggest areas for intervention when it comes to decarbonising India’s iron and steel sector.
Globally, clean steel production pathways are emerging around the scrap/DRI-EAF route. However, India is expanding its share of BF-BOF technology. As coal-dependent countries like China are actively considering increasing their share of steel from EAF, from less than 10% to 20% by 2030, India plans to decrease its share of EAF/IF steel, from the current 50–55% to 30–35% by 2030.
India’s choices are said to be closely linked to the rising price of natural gas and limited availability of domestic steel scrap, leading to its dependence on coal/coke in both DRI-EAF/IF and BF-BOF technologies.
Four major areas need technology interventions. The first and most essential area for tech intervention is development of a cleaner fuel-based technology for the country’s small-scale DRI plants. Currently, most of them operate rotary kilns that are dependent on coal. A big breakthrough is required to release a technology of the required scale that could operate on cleaner fuels like synthetic gas, natural gas and hydrogen, with minimal disruption to livelihoods.
The second area for intervention is the technology needed to reduce the emissions intensity of India’s current and upcoming fleet of blast furnaces. The average CO2 emissions intensity of the BF-BOF technology route in India is 2.5 tonnes of CO2 per tonne of crude steel. A number of fuel and raw material beneficiation technologies, technologies to improve energy efficiency, and path-breaking furnace technologies are needed to lower the emissions intensity of Indian BF-BOF plants.
The world’s most efficient blast furnaces operate at an emissions intensity of 1.4–1.5 tonnes of CO2 per tonne of crude steel. Assuming carbon capture, utilisation and storage (CCUS) becomes feasible in India, it could further play a role in managing the rest of the emissions from this route.
Thirdly, it is important to develop affordable electrolysers and related technologies that are required to increase the possibility of producing green hydrogen-based DRI-EAF steel in the country. This is the cleanest steel-producing technology in the world, which will have to be adopted over time. We call this intervention crucial because the sooner its adoption accelerates, the sooner the technological trajectory of India’s steel industry can be steered on a more sustainable course.
Last but not least, technology interventions are also required to set up a well-equipped steel scrap collection, processing and management infrastructure in the country. As domestic scrap generation grows in India, it will become essential to develop a formalised system for proper accounting, handling and usage of steel scrap to decarbonise the country’s steel sector.
Tech interventions for decarbonising India’s cement sector
The larger part of emissions in a cement plant derive from the use of limestone as a raw material (responsible for almost 50–55% of plant emissions) and use of coal and pet coke to fire the kiln (attributable to 35–40% of plant emissions), which produces clinker from limestone. Clinker then becomes the main ingredient to produce cement.
The Indian cement sector has demonstrated a robust set of interventions in the past in terms of replacing limestone with fly ash and slag, and in improving energy efficiency. Replacing limestone with other cementitious materials will be a key driver of decarbonisation in the sector. A major intervention would be to increase the limit of fly ash in Portland Pozzolana Cement (PPC) from 35% to 45%. PPC is the largest share of cement type produced in India.
The key technological intervention for decarbonising the cement sector will be the electrification of the kiln, which could operate on renewable energy. Currently, India does not have any commercial or pilot kilns in cement plants that run on electricity.
Ultratech Cement in 2022 entered a collaboration with Finland-based cleantech specialist Coolbrook to implement its roto-dynamic heater kiln electrification technology, which heats the kiln using renewable energy. The companies said they expected to begin its commercial use by 2024, although it is not clear if this has happened.
In 2024, Coolbrook agreed a similar strategic cooperation deal with Jindal Steel Works (JSW) to implement its roto-dynamic heating technology at JSW’s steel and cement manufacturing sites in Karnataka, India.
A key challenge lies in India’s dependence on foreign companies for such technologies, coupled with their significant upfront costs. While the bigger plan involves integrating carbon capture into the kilns to tackle the remaining emissions, implementation seems a long way off because of limited progress on CCUS in India.
Industry initiatives and patent distribution
There have been several initiatives on industrial decarbonisation on various global platforms. Some of the more recent ones include Climate Club, Industrial Deep Decarbonization Initiative, Industrial Transition Accelerator and Leadership Group for Industry Transition (LeadIT). So far, only LeadIT directly highlights technology transfer as one of its major pillars, while a few others refer to provision of technical expertise and assistance.
The LeadIT initiative was launched by the governments of India and Sweden at the UN Climate Action Summit in 2019. Since then, its membership has increased to 38 (including companies and countries), and the Lead IT 2.0 version was launched at last year’s COP28 conference. During the launch event, an upcoming partnership between Dalmia Cement in India and SaltX Technology in Sweden was showcased, wherein they plan to set up a pilot plant to produce cement electrically by 2024. There had been no public update on the pilot as of April 2024.
However, these initiatives are yet to see significant funding and implementation of R&D, despite the strategies, policy dialogues and information sharing. One of the main concerns is that the bulk of these initiatives are from the private sector, with only limited public sector involvement.
Additionally, the current paradigm envisages transfer from developed to developing countries, ignoring the vast potential of developing countries to create technologies unique to their circumstances. The UN Conference on Trade and Development has found that developed countries continue to be the predominant beneficiaries of green technologies.
The question of international patent rights (IPR) underlying these technologies also remains unresolved. Private IPR owners are not obliged to share technology with developing countries on an affordable basis under the UNFCCC. Low-carbon technology development tends to be concentrated in a few countries, especially developed countries. The academic evidence suggests that IPR policies can contribute or impede climate technology transfer, and even create barriers.
Despite the fanfare around initiatives promoting partnerships between the developed and developing world, tangible progress on technology transfers in these sectors remains elusive.
This commentary is based on a blog first published by Down to Earth on 1 May 2024.
