Context: India is the first country globally to define a taxonomy for green steel. The Taxonomy marks a milestone in India’s decarbonization journey in the steel sector.

What is the Green Steel Taxonomy?

• Definition: It’s a framework that defines “green steel” based on its carbon emission intensity. This is the first such taxonomy globally, making India a pioneer in setting standards for sustainable steel production.

Key Features

• Emission Intensity Threshold: Steel is considered “green” if its CO2 equivalent emission intensity is less than 2.2 tonnes of CO2e per tonne of finished steel.

• Star Rating System (based on greenness): The threshold limit for star ratings will be reviewed every three years. And the current threshold is

• Five-star green-rated steel: Emission intensity lower than 1.6 tonnes.

• Four-star green-rated steel: Emission intensity between 1.6 and 2.0 tonnes.

• Three-star green-rated steel: Emission intensity between 2.0 and 2.2 tonnes.

• Scope of Emissions: Includes Scope 1 (direct emissions), Scope 2 (indirect emissions from energy consumption), and limited Scope 3 emissions (indirect emissions from the supply chain).

• Nodal Agency: National Institute of Secondary Steel Technology (NISST) will be nodal agency for measurement, reporting, and verification (MRV) and issuance of greenness certificates (issued annually) and star ratings.

• Review: The emission intensity threshold will be reviewed every three years to ensure continuous improvement.

Benefits of Green Steel Taxonomy 

• Environmental Sustainability: Promotes decarbonization of the steel sector, a major contributor to greenhouse gas emissions.

• Global Leadership: Establishes India as a frontrunner in defining green steel standards.

• Market Creation: Drives demand for low-carbon steel products and encourages innovation in sustainable steelmaking technologies.

• Policy Coherence: Provides a clear framework for developing policies and incentives to support green steel production.

Importance of Green Steel Taxonomy 

• Advancing National Mission on Green Steel:  A proposed Rs 15,000 crore mission under the upcoming ‘Green Steel Policy’ to support decarbonisation of steel industry. 

• Boosting Global Competitiveness Helps Indian steel remain competitive amid global policies like the EU's Carbon Border Adjustment Mechanism (CABM). Positions India as a leader in green steel manufacturing.

• Promoting Innovation and Growth: Represent a transformative framework in steel production that will foster innovation, and create a market for low-carbon products in India. 

Challenges

• Implementation: Meeting the emission intensity targets will require significant investments and technological advancements.

• Data Collection and MRV: Accurate and reliable measurement, reporting, and verification of emissions will be crucial.

• Competitiveness: Ensuring that Indian steel remains competitive in the global market while meeting the green steel criteria.

Initiatives to Decarbonise Steel Sector in India

• National Mission on Green Steel (NMGS): This mission aims to provide a framework for the transition to green steel production, including financial incentives, R&D support, and policy interventions.

• Green Steel Public Procurement Policy (GSPPP): This policy will promote the use of green steel in government procurement, creating a market for low-carbon steel products.

• Steel Scrap Recycling Policy 2019: Encourages the use of scrap in steel production, reducing reliance on primary production routes that are more carbon-intensive.

• Perform, Achieve and Trade (PAT) Scheme: Incentivizes energy efficiency improvements in the steel sector.

• Carbon Capture, Utilization and Storage (CCUS): While still in early stages of development in India, CCUS technologies have the potential to capture and store carbon emissions from steel plants.

Conclusion

• According to the government document, the threshold for determining the categories will be reviewed every three years. India, the world’s second-largest steel producer after China, is working on a green steel policy in an attempt to decarbonize its procurement and production.

• India needs to invest $120 billion to reach its target steel production level of 300 million tons by 2030, according to the Ministry of Steel. Without these investments and amid rising demand, the country could become a net steel importer by that time.