TERI and DIW Berlin unveil a radical report on financing decarbonization in Indian secondary steel sector

New Delhi, December 18, 2023: In a significant move to address decarbonization in the steel sector, The Energy and Resources Institute (TERI), in collaboration with DIW Berlin, launched the report 'Financing the Decarbonization of Indian Secondary Steel Sector: Towards an Enabling Environment' on Monday. The study, commissioned jointly, delves into the challenges hindering the Indian secondary steel sector's access to financing for decarbonization technologies. The report identifies pathways for creating an enabling environment to channel international finance, facilitating technological upgrades in the sector.

International collaboration addresses challenges and identifies solutions for sustainable technological upgrades

Dr Karsten Neunoff, Head of Department – Climate Policy, DIW Berlin, opened the webinar organized to launch the report. Taking the panel and the audience through the findings of the study, Dr Manish Kumar Shrivastava, Senior Fellow, TERI said, “Transitional technological pathways are not an option for MSMEs in the secondary steel sector, owing to their size and physical constraints. Consequently, it isn’t simply the high upfront investment requirements, but also the technical and structural difficulties associated with the sector, that makes its decarbonization specially challenging.”

Dr Shrivastava highlighted that the secondary steel sector contributes 40 percent to the total steel output in the country, which makes it even more pertinent to ensure that the rate of decarbonization is addressed.

A panel discussion by accomplished line up of panelists was moderated by Mr RR Rashmi, Distinguished Fellow, TERI. Speaking on the industry regulation and financial support, Mr Arpan Gupta, Additional Director, FICCI, said, “Decarbonization is the focal point of discussion in the board room, more so with respect to emissions in terms of production expansion.”

“Perhaps a similar fund to National Infrastructure Investment Fund can be set up for the secondary steel sector as well,” added Mr Gupta.

The other aspects that were touched upon were to consider relabeling secondary steel plants as non-integrated steel plants; before seeking financing, assess the commercial availability of technologies for the secondary steel sector; and implement policy measures for scrap availability, including a regulatory framework for organized scrap recycling, raising awareness about financing instruments, and fostering international partnerships.

Speaking on greening of finance, specific financing solutions, instruments and structures, Mr Yash Kashyap, Senior Analyst, Climate Policy Initiative (CPI), said, “Possible suggestions and recommendations that can be looked at for financing the secondary steel sector in India could be the development of comprehensive carbon pricing mechanisms, especially considering the MSMEs in the secondary steel sector. Disclosures for companies/financial institutions on total investments for the low-carbon technologies can also be mandated.”

Mr Mahesh Date, Chairman, The Institute of Indian Foundrymen (IIF) stressed that the issue of decarbonization should be looked at from just transition point of view. “Steel is contributing to the economy and also towards the climate damage. Therefore, the reason to address the issue,” said Mr Date. Particularly highlighting the net-zero target by 2070, he added sectoral specific strategies need to be developed, like for the next 10 years, the priority should be on integrating the BATs and further, the focus on renewable energy should be emphasized.

“Developing a business case is essential for clean technology. A clear front-runner in terms of technological intervention for the sector would be needed to enable scalability. Importantly, collection and distribution channels of scrap need to be developed, alongside segregation methods to ensure greater recyclability and circularity within the sector,” was the perspective shared by Mr Kaveesh Thakker, Principal and Vice President, Sustainable Investments, Multiples Alternative Asset Management Pvt Ltd, the last panelist of the session. Creating sustainability in business was an aspect particularly emphasized by Mr Thakker.

The session was concluded by Mr Rashmi on a note that all the elements of the eco system should be geared up to address the issue regarding decarbonization.

Access Report Here: https://bit.ly/SNAPFISteelReport