Understanding Carbon Capture Utilisation and Storage (CCUS) in India’s Steel Sector
Introduction to CCUS
Carbon Capture, Utilisation, and Storage (CCUS) has emerged as a controversial topic, especially in the context of India’s ambitious growth trajectory in the steel sector. The recent announcement of ₹20,000 crore ($2.2 billion) in support for CCUS projects raises several questions about its efficacy and viability. Critics argue that this financial injection could lead the steel sector down a path fraught with high emissions and reduced energy security.
The Track Record of CCUS
Historically, CCUS has been touted as a promising solution for reducing emissions across various industries. However, the reality has often fallen short. The International Energy Agency (IEA), once optimistic, has revised its views, now acknowledging the limited role CCUS can play in the urgent need for decarbonization.
High costs associated with investment, operation, and transportation, coupled with uncertainty about suitable storage locations, mean that CCUS often appears economically unfeasible when compared to genuinely clean alternatives.
CCUS in the Steel Industry
In the steel industry specifically, the performance of CCUS has been particularly underwhelming. The Al Reyadah plant in the UAE, the only commercial-scale CCUS facility in this sector, captures only about 25% of its emissions. Since its establishment a decade ago, no other large-scale CCUS plants for steelmaking have come into existence.
Most Indian steel plants utilize blast furnace (BF) technology, contrasting with Al Reyadah’s direct reduced iron (DRI) method. This lack of adaptation raises significant concerns about the feasibility of implementing CCUS technologies suited for India’s industrial landscape.
The Challenges Ahead
One major concern lies in the inadequate capture rates exhibited by numerous CCUS projects. For instance, ArcelorMittal’s flagship plant in Belgium captures less than 2% of its carbon emissions and is now facing potential shutdown. Such examples underscore the inherent inefficiencies and risks associated with CCUS technologies.
Moreover, CCUS fails to address the methane emissions produced during metallurgical coal mining, which can contribute significantly—up to one-third—to the total lifecycle emissions of steel production. This oversight adds another layer of challenge in the quest for decarbonization.
The Energy Security Dilemma
India’s steel sector heavily relies on imported met coal, with approximately 90% of its needs sourced from abroad. This increasing dependence poses a mounting energy security risk, especially given that Australia, the primary supplier, is facing economic and regulatory uncertainties that could threaten future availability.
By investing in CCUS, the Indian government risks locking the steel industry into a high-emission pathway that jeopardizes energy security and sustainability.
Alternative Approaches
Unlike CCUS, innovative steel-making technologies have the potential to genuinely decarbonize the industry while also addressing energy security concerns. The production of green hydrogen, for instance, is being piloted by firms such as JSW Steel in DRI-based processes. This approach leverages domestically produced resources and offers a sustainable alternative while reducing dependence on imported coal.
Furthermore, scrap steel recycling presents another viable long-term solution. With more scrap becoming available in the Indian economy, enhancing efforts in collection, sorting, and logistics of scrap steel could significantly reduce emissions and lessen reliance on imported resources.
The Way Forward
India stands at a critical juncture as one of the world’s largest steel growth markets. The choices made today regarding technology and infrastructure will significantly influence both environmental outcomes and energy security for years to come. Careful consideration, innovative thinking, and strategic investments are essential to pivot towards a sustainable and resilient steel industry.
Author Note
The above insights were crafted based on the research and analysis of Simon Nicholas, Lead Analyst – Global Steel, IEEFA. The views expressed herein are of the author’s own, and it is crucial for stakeholders to engage with this dialogue to shape India’s future in steel production effectively.