Centre to launch Rs 5,000 crore scheme for steel sector decarbonisation
India is set to launch a Rs 5,000 crore scheme within the next three months aimed at reducing carbon emissions in the steel sector, according to official sources. The initiative comes as the country's steel industry faces pressure to align with global climate goals and improve its environmental performance.
Official data shows that India’s steel industry currently has an emission intensity of 2.55 tonnes of CO₂ per tonne of crude steel, notably higher than the global average of around 1.9 tonnes of CO₂ per tonne. This gap highlights the urgent need for technological upgrades and cleaner production methods.
Key features of the proposed scheme
The scheme is expected to provide financial incentives for steel plants to adopt energy-efficient technologies, carbon capture mechanisms, and renewable energy integration. It will likely target both large integrated steel producers and smaller secondary steel manufacturers.
According to government officials, the scheme will be designed to promote the use of green hydrogen in steelmaking, scrap-based electric arc furnaces, and other low-carbon technologies. The Ministry of Steel is working on the detailed framework and will consult industry stakeholders before finalising the guidelines.
Impact on India's climate commitments
India has committed to achieving net-zero emissions by 2070 and reducing the carbon intensity of its economy by 45% by 2030, compared to 2005 levels. The steel sector, being one of the largest industrial emitters, is critical to meeting these targets.
The scheme is part of a broader strategy that includes the National Green Hydrogen Mission and the Perform, Achieve and Trade (PAT) scheme for energy efficiency. Industry experts believe that the Rs 5,000 crore fund could leverage additional private investment and accelerate the transition to green steel production.
Challenges and industry response
While the scheme is widely welcomed, challenges remain in terms of technology availability, high capital costs, and the need for skilled workforce. The steel industry has called for a clear roadmap and sustained policy support to make the transition viable.
"The scheme will provide much-needed impetus for decarbonisation, but it must be complemented by measures such as carbon pricing and green procurement policies," said a senior official from a leading steel association. The government is also exploring international collaborations to access advanced technologies and financing.
The launch is expected within three months, with the first disbursements likely by the end of the fiscal year. The scheme will be monitored by a dedicated committee to ensure effective utilisation of funds and measurable emission reductions.
