What Happened
- Tata Steel, JSW Steel, and ArcelorMittal Nippon Steel (AM/NS) are ramping up investments in scrap-based steelmaking in response to India's new Green Steel Taxonomy and the EU's Carbon Border Adjustment Mechanism (CBAM).
- Tata Steel is setting up a 0.75 million tonne greenfield scrap-based steel unit in Ludhiana at Rs 2,600 crore investment.
- AM/NS India expects 70% of its production to be classified as green steel by 2027 and has become the first integrated steel producer in India to receive green steel certification.
- JSW Steel has targeted reducing its emission intensity to 1.95 tonnes of CO2 per tonne of crude steel by 2030.
- India's Green Steel Taxonomy, the world's first such framework, was released on December 12, 2024, and notified in the eGazette on December 23, 2024.
Static Topic Bridges
India's Green Steel Taxonomy and Star Rating System
India became the first country in the world to release a Green Steel Taxonomy in December 2024, providing a standardised framework for classifying steel based on its carbon footprint. The taxonomy defines "Green Steel" as steel produced with CO2 equivalent emission intensity less than 2.2 tonnes of CO2e per tonne of finished steel (tfs). A star rating system assigns grades based on emission intensity levels, providing a transparent benchmark for both domestic procurement and international trade.
- Five-star rating: emission intensity below 1.6 t-CO2e/tfs
- Four-star rating: 1.6 to 2.0 t-CO2e/tfs
- Three-star rating: 2.0 to 2.2 t-CO2e/tfs
- National Institute of Secondary Steel Technology (NISST) is the nodal agency for measurement, reporting, verification, and issuing greenness certificates
- Government has mandated Public Sector Undertakings to prefer certified green steel in procurement
Connection to this news: The taxonomy provides the regulatory framework that is driving Tata Steel, JSW, and AM/NS to invest in scrap-based electric arc furnace (EAF) steelmaking, which produces significantly lower emissions than traditional blast furnace routes.
EU Carbon Border Adjustment Mechanism (CBAM)
The EU's CBAM entered its definitive phase on January 1, 2026, imposing a carbon-adjusted levy on imports of steel, cement, aluminium, electricity, fertilisers, and hydrogen. During the transitional phase (2023-2025), importers only had to report embedded emissions. From 2026, importers must purchase CBAM certificates equivalent to the carbon price that would have been paid under the EU Emissions Trading System (EU ETS). The mechanism aims to prevent "carbon leakage" where production shifts to countries with weaker climate policies.
- Definitive phase began January 1, 2026, with financial obligations on imports
- India's average steel emission intensity: approximately 2.5 t-CO2/tonne (vs EU benchmark of 1.8 t-CO2/tonne)
- Indian steel exports to the EU could face carbon charges of approximately EUR 270 per tonne under default values
- Steel accounts for 12% of India's national emissions (global average: 8%)
- Indian steel company profitability on EU exports projected to decline 25-30% post-CBAM
Connection to this news: CBAM is a direct commercial driver for Indian steelmakers to shift toward scrap-based production, as the electric arc furnace route can reduce emission intensity by 60-75% compared to traditional blast furnace steelmaking.
Steel Scrap Recycling Policy and Circular Economy
India's Steel Scrap Recycling Policy, announced in 2019, aims to build a scientific and systematic collection, dismantling, and processing framework for ferrous scrap. India currently recycles approximately 25-30 million tonnes of steel scrap annually but imports about 6-8 million tonnes to meet demand. The policy promotes setting up scrap-processing centres, formalising the unorganised scrap sector, and creating quality standards for recycled steel. It is aligned with India's broader circular economy goals and the National Resource Efficiency Policy.
- India's crude steel production: approximately 144 million tonnes (FY2025), 2nd largest globally
- Steel scrap availability in India expected to reach 70-80 million tonnes by 2030
- Electric Arc Furnaces (EAFs) use 80-100% scrap and produce 0.4-0.6 t-CO2/tonne vs 2.0-2.5 t-CO2/tonne for blast furnaces
- Five priority decarbonisation areas: energy efficiency, increased scrap use, renewable energy, green hydrogen, and CCUS
- India targets 300 million tonnes crude steel capacity by 2030 under the National Steel Policy 2017
Connection to this news: The simultaneous push from domestic green steel norms and EU CBAM is accelerating major steelmakers' pivot to scrap-based production, potentially transforming India's steel industry from one of the most carbon-intensive globally to a leader in green steel certification.
Key Facts & Data
- Tata Steel's Ludhiana scrap-based unit: 0.75 MT capacity, Rs 2,600 crore investment
- AM/NS India: targets 70% green steel production by 2027
- JSW Steel: targets 1.95 t-CO2 per tonne of crude steel by 2030
- India's Green Steel Taxonomy: world's first, notified December 2024
- India's steel emission intensity: 2.5 t-CO2/tonne (EU benchmark: 1.8 t-CO2/tonne)
- EU CBAM definitive phase: began January 1, 2026
- India is the 2nd largest steel producer globally at approximately 144 million tonnes (FY2025)
- Steel accounts for 12% of India's national CO2 emissions