From Emissions to Efficiency: The Role of ESG SaaS in Transforming the Indian Steel Sector

by Harsh Choudhry and Vikas Upadhyay 

In the pursuit of global climate goals outlined in the Paris Agreement, the steel manufacturing sector has emerged as a crucial focal point for decarbonization efforts. As the largest single industry emitter, responsible for approximately 8% of global greenhouse gas emissions, the steel sector holds immense potential for driving transformative change. For India, where steel manufacturing constitutes 12% of total emissions and significantly exceeds the global average carbon intensity, the urgency to decarbonize is paramount.

The Challenge and Opportunity

India’s commitment to achieve a 45% reduction in emissions intensity of its GDP by 2030 reflects its dedication to combat climate change. However, the steel sector presents a unique challenge due to its energy-intensive operations and reliance on coal-based production methods. Energy consumption in Indian integrated steel plants surpasses international standards, underscoring the need for comprehensive and systemic change.

The growth trajectory of India’s steel production further complicates the situation. With an expected surge from 110 million tonnes in 2022 to 300 million tonnes in 2030, the potential carbon emissions associated with this growth are concerning. This calls for a twin strategy of expanding capacity while significantly lowering emissions.

Decarbonization Strategies

While larger players like Tata Steel, JSW, and JSPL have embarked on the journey to net-zero emissions, mid-size steel companies, contributing over 50% of emissions, are yet to initiate meaningful actions. Decarbonization holds immense value, not just in achieving environmental goals, but also for creating competitive advantages and sustainable business models.

1. Green Products and Demand Drivers: Green steel, characterized by its low carbon footprint, holds a promising future. The concept of Green Steel is gaining traction, with companies like Kalyani Ferresta already reaping benefits. ISO14067 certification serves as a gateway to labeling products with their carbon footprint. The demand for decarbonized steel is multifaceted:

• • Customer Demand: Specialized steel demand from automotive and niche segments is rising. Initiatives like Responsible Steel and SteelZero are influencing buyers to seek sustainable sources. For instance, Volvo’s commitment to procure only from SteelZero certified suppliers showcases the shift towards sustainable procurement.
  • Regulatory Push: Stringent regulations in export markets, such as the EU’s Carbon Border Adjustment Mechanism (CBAM), mandate the disclosure of carbon emissions for imported goods. Indian steel exports could face penalties if not aligned with global standards. This necessitates immediate action to avoid potential risks.

2. Organizational Sustainability: Sustainability isn’t just about fulfilling environmental responsibilities; it’s a strategic tool for enhancing brand value. Companies incorporating sustainability reporting as part of their valuation process are demonstrating a forward-looking approach. Sustainability Linked Loans and Bonds offer opportunities for accessing capital at lower costs, exemplified by JSW Steel’s $500 million sustainability-linked bond.
3. Resource Savings and Technological Leapfrogging: A significant portion of emissions arise from energy and material consumption. While energy efficiency measures have been adopted by major players, there’s untapped potential in the secondary market. Leveraging AI-led plant optimization, waste heat recovery, biomass usage, and yield improvement programs can lead to substantial resource savings.

Decarbonization Roadmap: “Steel Pranchamrit”

Initiating a decarbonization journey begins with a robust framework to track greenhouse gas emissions effectively. The “Steel Pranchamrit” approach offers a comprehensive path:

1. Global Standards Alignment: Adhering to methodologies like the World Steel Association ensures consistency and comparability on an international level.
2. Scope 3 Integration: Including all three scopes of emissions enables a thorough assessment, allowing for real-time integration with suppliers for deeper calculations.
3. Compliance and Reporting: Addressing both domestic (BRSR) and export market (CBAM, Responsible Steel) reporting requirements ensures adherence to evolving regulations.
4. Green Steel Certification: Facilitating ISO 14067 certification through traceability at the customer batch level paves the way for Green Steel production.
5. Alternative Monetization: Establishing avenues for carbon credits and sustainable financing adds economic viability to decarbonization efforts.

Embrace the Future with Sentra.World

sentra.world is a cloud based software which helps industrial companies manage their sustainability journeys using AI and blockchain. Through its steel specific product sentra.calculus.steel, it helps steel companies “measure” their GHG emissions based on WSA methodology and AI tools, “mitigate” by developing net zero roadmaps and tracking projects, “monitor” through its extensive & insightful KPI dashboards and supplier integration, and “monetize” through compliance reporting e.g., BRSR, CBAM, green product certifications and carbon credits. sentra.world is fully committed to decarbonization of India’s steel industry.

(The author is Harsh Choudhry and Vikas Upadhyay, co-founders of Sentra.world, and the views expressed in this article are their own)