India to set tailored emission targets for steel makers, penalties for non-compliance

Companies failing to meet targets will face penalties. However, they can offset these with carbon credits.

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India plans to introduce tailored emission reduction targets for its large steel makers in a bid to balance decarbonisation needs with capabilities of existing players, people familiar with the development said.

The proposed goals are in line with targets defined under the National Steel Policy (NSP), 2017.

Companies will face penalties for not achieving emission reduction goals, said an official. However, the official said, these commitments can be offset by purchasing carbon credits.

“These rules lean towards penalising the players as the government uses a combination of incentivising and penalising the stakeholders to ensure compliance with policy targets,” a senior official aware of the plans told ET.

“Stricter goals have been defined for larger players while smaller steel producers have moderated targets,” the official said.

NSP 2017 aims to reduce emissions in the iron and steel sector to 2.2-2.4 tonnes CO2 per tonne of crude steel in the blast furnace route by 2030. The current average emissions of the domestic steel industry stand at 2.54 tonnes CO2 per tonne of crude steel production.

The Central Pollution Control Board can impose a penalty if an obligated entity under the norm fails to achieve the target, with the quantum being twice the average price, as determined by the Bureau of Energy Efficiency, at which carbon credit certificate is traded during the trading cycle in the year.Officials said the obligated entities can also meet their emission goals by purchasing carbon credit certificates from the Indian carbon market if they fall short of their prescribed target.The Bureau of Energy Efficiency is the designated authority for issuing certificates. “These targets consider the individual current capacity of steel manufacturers to deploy resources for reducing GHG emissions. While the emphasis is on lowering the emission level, the policy also aims to do it in the least disruptive way for the sector,” added the official.The rules guide steel manufacturers to lower their emissions gradually, a reduction of 8-9 per cent by FY27 from FY24 levels.