Global credit rating agency Moody’s Investors Services in its latest report has said that India’s steel industry is yet to introduce extra stringent emission rules and increased coal utilization poses a serious problem to the potential for carbon mitigation. In addition, it noted that the imposition of tariffs under Section 232 on steel imported into the US is likely to result in some capacity restarts. Besides, it said that the global steel industry's progress in lowering emissions and energy use continues to be limited. It pointed out that the challenge for the industry will be to lower carbon intensity at a time when demand for steel is estimated to grow 31 percent by the year 2030, from 2016 levels.
The US-based agency mentioned that the World Steel Association reports CO2 intensity has increased by more than 10 percent, to 1.9 tonnes per tonne of steel manufactured over the past decade, while energy intensity has fallen modestly. It also noted that under the Paris agreement, India has agreed to reduce the emissions intensity of its GDP by 33-35% by 2030 from 2005 levels. Adding further, it said that potentially offsetting the benefits of China's rationalisation is the expected doubling of Indian steel production by 2030, challenging the industry's efforts to correct overcapacity and reduce carbon intensity.
According to the report, India's anticipated steel growth is due to the country's rapid urbanisation, large infrastructure needs, and an increasing preference for steel and cement over materials such as clay bricks. It also said that steel making is likely to become less carbon intensive as new mills are built and more scrap becomes available, however coal is expected to remain the dominant energy source for the sector. It noted that steel-makers across the globe are facing increasing pressure to reduce greenhouse gas emissions. It added that efforts to decarbonise the global economy will bring greater scrutiny to the energy and carbon intensity of the steel sector, which is responsible for 6-7 percent of global emissions.