A new report on India’s steel industry warns that the sector’s CO2 emissions could quadruple by 2050 to 837 million tonnes. Steel consumption is a key indicator of economic growth, but so far the sector has relied almost exclusively on coking coal for the “reduction” of iron ore. The process releases vast quantities of CO2. Economic growth is good, but in times like these there isn’t any room for increased emissions.
However, the report was released by The Energy and Resources Institute (TERI) and offered a number of solutions. The combination of energy and resource efficiency alone would reduce emissions by 45%, it says, and it recommends imposing penalties on the sector by 2030 to clean up its act.
However, unless the process of manufacturing steel itself is carbon-free, the sector will continue polluting. Adopting low-carbon technologies and setting standards for low-carbon steel are welcome, but today we’re at a point where the country’s major industries need to fully de-carbonise.
Here’s where the yet another solution of switching to Hydrogen comes in. Using hydrogen instead of coal eliminates the release of CO2, as the process merely produces water as the by-product. A detailed explainer can be found here.
The question is, where will India source hydrogen from?
Splitting water through electrolysis is one route. Powering the process through renewables alone does make for “green steel”. But given India’s plans to become the world’s fastest energy consumer by 2030 — which would involve greater oil and gas consumption — the most likely candidate would be natural gas (which is largely methane).
The country is already expanding its gas grid far and wide, so the opportunity to lower industrial emissions would be a healthy addition to the fuel’s reputation. Several new oil fields are being opened as well, making the case for gas even stronger.
Also, Bloomberg New Energy Finance reported last year that to be competitive with hydrogen from natural gas, renewables-powered electrolysis would have to produce hydrogen at about USD 60 cents a kilogram. Right now the cost is somewhere between USD2.5-6/kg.
That’s not the real challenge for now though. The predicament is that natural gas could be much worse when it comes to curbing emissions than is reported. It burns magnitudes cleaner than coal, but massive amounts of methane escape to the atmosphere in “fugitive emissions” during extraction. The US, for example, loses nearly 2.3% of its annual gas output to these leaks. And the exact figure varies by source, but methane is generally considered to be 80-86 times more potent as a greenhouse gas than CO2 over 20 years. Despite best efforts, distillation columns, storage capacities and pipelines aren’t leak proof, so the share of methane lost to leakages could only go up.
Therefore, what may seem like a promising solution will only be as good as the source of the fuel. It has already found strong backing across Europe. Prominent players, like ThyssenKrupp, ArcelorMittal and Gazprom are already experimenting with ‘green hydrogen’, and German chancellor Angela Merkel has declared the fuel as pivotal to “rebuilding Germany’s industrial base” through to 2050.
Yet in India, the inertia of investing in fossil fuels could prove much harder to shake off, and renewables just aren’t coming online fast enough. So if our version of “green steel” is ultimately fueled by natural gas, it would risk turning a much-touted transition into more of an eyewash. Unless of course, the industry itself decides to innovate and opt for renewables-powered electrolysis. It’s not beyond their capabilities, and even presents an enormous opportunity for self-regulation.