Domestic primary steel producers are set to meet their goal of reducing carbon emissions to less than 2 tonnes of carbon dioxide per tonne of crude steel (tCO2/tcs) by 2030, aligning with the current global average, credit rating firm Crisil said in a report on March 26.
Reducing emissions will broaden fund-raising avenues and improve export competitiveness, a positive for credit quality. That said, complete transition to low carbon steel, also known as green steel, remains a challenge, the agency said.
The steelmakers have set a target of carbon emissions less than 2 tCO2/tcs by 2030. As of last fiscal, reported carbon emissions by the steelmakers were down to 2.35 tCO2/tcs from over 3 in fiscal 2005, translating to 65 percent of targeted emission reduction, according to the report.
Coal-fired steel plants are one of the largest industrial sources of CO2 pollution. Companies mandated to reduce their carbon footprint are looking at using low-carbon energy sources such as hydrogen, coal gasification or electricity to produce steel.
"Achieving the 2030 target will require players to step up annual
reduction rate to 2.3%, which is possible by raising the share of renewable energy and scrap-based EAF capacity and adopting carbon capture technologies," said Ankit Hakhu, Director, CRISIL Ratings.
The reduced emissions will also strengthen ESG profiles, which will improve access to additional funding avenues such as sustainable finance that has a lower cost of capital and long tenure. This is important, given the expected annual capital expenditure of Rs 55,000-60,000 crore between fiscals 2024 and 2027, according to Crisil.
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