The first is an Indian transnational with an annual steel-making capacity of 34 million tonnes. Climbing aboard the global energy transition, it is upgrading its steel plant in Europe to run on hydrogen.
Even back home in India—with a government yet undecided about decarbonisation and far lower social pressure on emissions—it has set up a small carbon capture and utilisation unit at its oldest steel plant to test the economics of carbon sequestration.
The second firm is smaller, one of India’s many second-rung steel-makers, with an annual steel-making capacity between 1-2 million tonnes a year. Over the past five years, between a slowing economy and a competitive advantage in India’s steel sector sliding towards larger companies, firms like this one have struggled. In 2018, it had a close brush with India’s bankruptcy courts—but survived.
The company knows it needs to move towards decarbonisation. Net zero comes up in its strategy discussions. But as a senior manager in the firm told CarbonCopy, firms like this are struggling with more existential questions. “Smaller firms are struggling to serve lenders. If anything is left, they have to serve equity [shareholders]. There is no capacity for additional investments.”
This is a tale about Tata Steel and Jayaswal Neco. More specifically, this is a tale of what their contradictory approaches tell us about India’s response—as a consumer of energy—to the renewables revolution.
The key in this report? Tata Steel is moving towards decarbonisation in the absence of a regulatory dictat. Ask why and you find your way to an extraordinary development. As I write: “For the longest time, developing economies have resisted emission reduction. What we are seeing now, if not by design then by outcome, is a large chunk of global finance bypassing national governments and forcing decarbonisation upon value chains.”
So much of the commentariat is talking about when India will announce its net zero target. So is our government. And I am thinking they are sticking to an outmoded view of the world where national commitments drove climate action. The game has changed.
This report has been cross-posted by The Wire: https://thewire.in/energy/the-decarbonisation-challenge-for-indias-steelmakers