If getting India to net-zero is like winning the Indian Premier League (IPL) cricket tournament, then hard-to-abate sectors such as steel and cement are its Royal Challengers Bangalore (RCB). Non-cricket fans: RCB has never won the IPL despite boasting a lineup of some of the best cricketers around.
India has a big challenge. It needs to decarbonise and reach net zero carbon emissions by 2070 without deindustrialising. Emission intensive heavy industries such as steel, cement, and aluminium are the hardest climb for the country’s industrial decarbonisation journey. This is largely due to the complex infrastructure they use. Take the steel industry, for instance, which emitted 297 million tonnes of CO₂ in 2021-22. There are four major routes to making steel and they differ on a variety of parameters — from how they treat the iron ore in the first place, to the technology used for reduction, and even the primary fuel used in the process. In India, the second largest steel producer in the world, almost 48 per cent of crude steel is produced through the blast furnace-basic oxygen route which is entirely coal-based. Now, what would it take to cut these emissions?
A first-of-its-kind analysis by CEEW found that USD 283 billion in additional capital expenses and USD 8.8 billion in additional operating costs per year would be needed to decarbonise India’s existing steel plants. Further, Carbon Capture Utilisation and Storage (CCUS) would cut the largest chunk of emissions (56 per cent) from the industry. But this means that near net-zero steel could be 40-70 per cent more expensive than current costs. This is because CCUS is at a relatively nascent stage of development globally and is not yet commercially viable.
What are the other less expensive options to propel the steel industry to (near) net zero? We did a Marginal Abatement Cost (MAC) curve analysis for the steel industry, which evaluates the different decarbonisation technologies available, the extent to which they can reduce emissions, and how much it will cost.
Similar to steel, India’s cement industry, which despite being one of the most energy-efficient in the world, emitted 218 million tonnes of CO₂ in 2018–19. Apart from the use of fossil fuels for electricity, carbon emissions are inherent to cement production due to the limestone processing required.
As the second-largest manufacturer of cement in the world, what would it take for the Indian cement industry to cut its current emissions to net zero? CEEW’s pioneering analysis found that the cost to decarbonise the existing cement production in India will amount to USD 334 billion in additional capital expenses and USD 3 billion in additional operating costs per year. As much as 67 per cent of emissions would need to be abated through carbon management techniques such as CCUS and carbon offsetting. But the cost is much higher than other alternatives. We unpack the various options to produce net-zero cement by breaking down the Marginal Abatement Cost (MAC) curve for the industry.