Steel plays a vital role in today’s world of industrialisation, from the manufacturing table to infrastructure and economic growth.
However, the industry is also one of the highest carbon-emitting sectors, contributing significant greenhouse gas emissions. India, as the second largest producer of steel in the world, faces increasing global commitments to net-zero and domestic policies that emphasise sustainability, and its steel industry must rapidly transition to lower-carbon production methods.
Amid ongoing industry decarbonisation initiatives, the demand for green steel surges. Led by the automotive and heavy industries who seek sustainable materials, the market is expected to reach US$766.76 billion by 2030 with demand for fossil-free steel projected at 10 million tonnes annually.
While automakers are actively securing long-term green steel supply agreements, cost-sensitive industries like construction are slower to adopt due to the green premium, a significant price gap between conventional and low-carbon steel. Addressing this economic barrier is key to scaling green steel production and ensuring industry-wide adoption.
Strategic action: The role of offtake agreements and green hydrogen
The transition to green steel requires both short-term emissions reduction and long-term infrastructure investments. In the near term, enhanced recycling, energy efficiency improvements, and carbon capture, utilisation, and storage (CCUS) retrofits can help reduce emissions from existing steel plants.
Long-term planning must focus on scaling hydrogen-based direct reduction (H-DR), a specialised decarbonisation technology, projected to account for 35 per cent of the global steel production by 2050.
Strategic supply chain planning also plays a crucial role in cost optimisation. For example, studies indicate that exporting hydrogen-reduced iron (HBI) is more cost-effective than transporting hydrogen and iron ore separately, making regional infrastructure planning a key consideration for industry players.
Recent trade policy measures by the United States (US) have led to notable disruptions in the global market, prompting its primary trade partners such as China and Canada to consider or implement responsive actions. This escalation, that includes the tariff on steel, could impact global steel prices and trade dynamics.
While India’s direct steel exports to the US remain relatively small, at around 100,000 metric tons annually, the country may experience indirect consequences. With major exporters like China and South Korea seeking alternative markets, India could see an influx of redirected steel imports, intensify competition and potentially drive down domestic steel prices.
This shift could be particularly challenging for smaller Indian steel manufacturers, who may struggle to compete against cheaper foreign steel.
India is proactively working toward decarbonising its steel industry through various government initiatives. The Ministry of Steel for instance, has laid out a roadmap focusing on energy efficiency, hydrogen adoption, and carbon capture technologies.
The introduction of a green steel taxonomy also provides a framework for defining and promoting sustainable production. In addition, a green public procurement policy is under development to drive demand for environmentally friendly steel.
While the impact of US tariffs on Indian steel producers may be limited in direct terms, the risk of increased competition from redirected global exports remains a concern. However, India’s strong policy push toward green steel presents a significant opportunity for the industry to innovate and establish itself as a leader in sustainable steel production.
The World Steel Chain-of-Custody (CoC) Guidelines provide a standardised framework for assigning greenhouse gas (GHG) emissions reductions to specific steel products. Key features of the guidelines:
- Enable the tracking and attribution of emissions reductions across the steel value chain.
- Allow emissions reduction projects to be credited and banked.
- Facilitate the issuance of these credits to customers who wish to make verified emissions reduction claims associated with their purchased steel products.
ERM’s expertise in steel decarbonisation
ERM has been at the forefront of guiding organisations through complex sustainability transitions. With a strong global presence and deep industry insights, ERM combines technical expertise, policy advisory, and strategic consulting to support steel companies in achieving low-carbon production.
Our work spans across key areas:
Carbon management and strategy development:
Identifying emissions reduction pathways aligned with national and global climate commitments and evaluating the feasibility of mitigation solutions, including energy efficiency improvements and process modifications.
Life cycle assessments (LCAs):
Conducting LCAs across each stage of the steel and iron value chain, supporting clients in assessing the environmental impacts of carbon mitigation measures and developing EPDs for steel products.
Investment and financing support:
Assisting with capital raising, technical due diligence, and sustainability-linked financing for green steel projects, including support for green bond issuance and ESG-driven investment structuring.
Techno-economic assessments:
Conducting feasibility studies and infrastructure readiness evaluations to support the adoption of breakthrough technologies such as hydrogen-based (DRI), scrap-based (EAFs) and CCUS.
Risk and opportunity assessments:
Evaluating low-carbon steel projects to help investors make informed, strategic decisions.
Regulatory and policy advisory:
Supporting organisations in understanding the evolving green steel landscape, aligning with environmental compliance frameworks, and enabling credible environmental claims regarding green steel use
Decarbonisation roadmaps and emissions reduction strategies:
We deliver tailored roadmaps and emissions tracking frameworks, enabling steel manufacturers to monitor Scope 1, 2 and 3 emissions and align with global best practices.
The path forward
The shift to green steel is not just a technological challenge—it is a strategic imperative. Policymakers, industry leaders, and financial institutions must collaborate to scale production, reduce costs, and create a regulatory framework that accelerates adoption. While first movers in the private sector are leading the way, long-term success will depend on global alignment and coordinated action.
We are at a critical juncture. The opportunity to decarbonise steel is narrowing, and delays will have profound consequences for climate stability. Immediate action on emissions reduction, coupled with long-term investments in green hydrogen infrastructure, is imperative. Green steel is not just an environmental necessity—it is an economic opportunity that, if seized now, will shape the future of global industry and infrastructure.
The Future of Steel is Green—Let’s Build it Together.
Learn more about how ERM helps leading organisations navigate complex sustainability ambitions at www.erm.com.
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