India is eyeing setting up its own carbon trading system apart from bringing in a series of measures and norms that push high-emission industries towards decarbonisation in order to “mitigate impact” of the Carbon Border Adjustment Mechanism (CBAM) to be implemented by the EU from October 1 this year.

Measures include “hand-holding” across some industries, bringing in specific definitions and auditing standards apart from carrying out certification processes.

Select Ministries, such as Commerce & Industry and External Affairs, will take up issues that support India’s stand on CBAM across appropriate international fora. Efforts will be towards keeping MSMEs out of the ambit, said officials aware of the discussions.

Plans are afoot to develop the Indian Carbon Market (ICM), where a national framework will be established. A notification on the Carbon Credit Trading Scheme 2023 was notified recently.

“Global applications for enlisting verifiers would be explored. Market codes and regulations are under consideration and actual trade is still some time away”, an official who participated in these discussions said.

The carbon credit trading system incentivises entities that push for a transition to low-carbon practices by assigning a value (known as carbon credit) to each ton of carbon dioxide equivalent reduced or avoided. Companies surpassing their targets will be rewarded with carbon credit certificates, while those falling short will be required to purchase certificates to offset their deficit or face penalties.

In a meeting held some months back, at least two ministries - steel and mines - that are expected to be worst hit as the CBAM norms come into play were asked to sensitise their stakeholders. The preparedness of stakeholders is being assessed.

The CBAM enters a transitional phase from October 1, wherein identified industries trading in the EU must   report on the emissions embedded in their imports. From January 2026, the EU will start levying carbon taxes.

India is in talks with the EU to allow energy auditors from the country to verify carbon- intensive exports, including aluminium.

“Since there are very few such auditors, we are also working on how to bridge this requirement and also get such certificates validated at a global level,” an official told businessline.

Decarbonisation Process On

Tata Steel has carried out trials with hydrogen injection in blast furnaces. Kalyani Steel is utilizing solar power in its electric arc furnace. 

Tata Steel, JSPL, and JSW have also installed CO2 capture plants and a green hydrogen plant is underway (for trials) at JSW too.

The steel ministry has set up 13 task forces on green steel, and the report of these task forces is expected soon.

India’s emission intensity is 2.55 tonnes of CO2 emitted per tonne of crude steel produced; while the global average is 1.85.

At a plant-wise level, numbers are different. For instance, the Dutch plant of Tata Steel has a carbon emission of 1.8 tonnes per tonne of steel produced, while the emission at Tata Steel’s Jamshedpur plant is 2.11.

Faggan Singh Kulaste, Minister of State for Steel, in response to the Parliament, said processes are on across think tanks, S&T bodies, different Ministries and other stakeholders to discuss, deliberate and recommend different levers of decarbonisation. “The government is engaged in discussions and deliberations with Steel PSUs for promoting low carbon steel,” he said.

Initiatives to scale up Net- Zero Technologies like Carbon Capture and Storage (CCS) plants and invest in carbon capture, utilisation and storage are underway.

According to Kulaste (in another response), the Oil and Natural Gas Corporation Ltd. (ONGC) has signed a Memorandum of Understanding with Indian Oil Corporation Ltd (IOCL) for capturing CO2 from the company’s Koyali refinery and its utilization in two reservoirs of Gandhar field for CO2 sequestration. Additionally, ONGC has also signed MoU with Equinor and Shell to collaborate on such studies in India.

The National Thermal Power Corporation (NTPC) has undertaken a 10 tonnes per day (TPD) CO2 to Methanol pilot project at NTPC Vindhyachal where 20 TPD CO2 capture plant has been commissioned. The NTPC has also taken up a CO2 storage potential mapping study for Coal Bed Methane (CBM) rich Cat-1 fields in India in collaboration with IIT Bombay.

Push for green steel, green hydrogen

During a recent interaction, Union Power Minister, RK Singh said: “The other aspect is reducing the carbon content of the items that are being exported to Europe. That’s why we brought in this green hydrogen. We already have these pilots running on green steel and will come out with another pilot on green steel to ensure that future steel offerings have lower carbon content.”

During the investor’s call, the country’s largest steel maker, JSW Steel’s top management, maintained that “discussions between various global partners are on” and “engagement with the European Union is going on”.

“Through renewable energy, 1,000 MW is under construction, 225MW is now on in Vijayanagar, and we will continue to look at additional renewable energies for all our locations by 2030. Our intent is to bring the thermal coal usage to as close to zero as possible,” Jayant Acharya, Joint MD and CEO, JSW, said.

According to him, work is also on improving energy efficiencies within the system, using  beneficiation technologies and improving circularity – using internal scrap generation, recovery from tailings, etc.

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