Commodities

Steel hope for support to achieve net zero emission

Suresh P Iyengar Mumbai | Updated on August 29, 2021

Cost should also be shared by consumers

Steel companies hope the huge cost of transition to achieve net zero emission will be shared by the government, industries and consumers as being done globally.

Developed economies have set a stiff deadline to become carbon-neutral and expect fast developing countries such as India and China to reduce emissions to moderate global warming.

The US has set a net zero carbon emission target of 2050 with 52 per cent reduction from 2005-level in economy-wide net greenhouse gas pollution by 2030. Europe is also working to meet zero emission even while hitting carbon peak by 2026. It is banking on emerging hydrogen technology for its clean energy and fuel needs.

As the world’s largest greenhouse gas emitter, China expects emission to peak by 2030 before achieving net carbon neutrality by 2060. Steel companies, one the most polluting industries, has been struggling with the most inefficient producers shutting shop.

Also read: Resting on climate action a $11 trillion opportunity for India: Report

In a complete contrast to its earlier strategy of subsidising exports, Chinese government has started levying tax to disincentivise steel exports. Though lower exports from China have opened-up fresh opportunities for Indian steel companies, they would face similar challenges sooner than later.

‘Carbon allowance’

TV Narendran, Managing Director, Tata Steel told BusinessLine that the cost of transition to green energy is huge, and it has to be shared by the government, industries and consumers.

For instance, he said, European companies are given certain carbon allowance and if they save on the allowance, they can sell it in the market but will be forced to buy it if they breach the target. They also have carbon border adjustment mechanism to discourage a company making steel outside Europe and selling it to them, he added.

The Indian government has taken a decision to stick to the Paris (Agreement) and beyond that anything will happen in India only if the developed world writes a cheque. Hopefully, some convergence will happen at COP26 (UN Climate Change Conference) based on different views, said Narendran.

Support for net zero

Echoing Narendran’s views, Seshagiri Rao, Joint Managing Director, JSW Steel said every global company which is working towards net zero emission has support either by way of grant and concessional financing to achieve carbon neutrality.

As per the Paris Accord, India has to reduce carbon intensity by 33 per cent by 2030. For this, industries have to switch 40 per cent of their power consumption to renewables. Steel companies too are working on this, but this only help reduce emission but not become carbon neutral, he added.

Besides the Indian government, developed countries should also provide the technology and subsidise the cost of developing economies effort to cut down greenhouse emission as these countries emitted more carbon and developed their economy, said Rao.

Consumers mindset should also change to pay more for the green products as producers have to incur higher cost on technologies, he added.

Published on August 29, 2021

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