Presents

International Conference on
GREEN & SUSTAINABLE IRON MAKING

January 17 – 18, 2024

 Climate change: Global and Indian
context
Agenda

Implication for steel industry

 Global emissions must be cut by 43% in this decade for the world to reach the 1.5°C
limit agreed in Paris
Global GHG emissions (GtCO2e/Yr.)

70 Warming Emission
projected by 2100 reduction by 2030
60
Current polices 2.5-3.9°C +5%
50 2019
level
-4%
40 Pledges & Targets 2.4°C

30 Historical Optimistic net zero

2.1°C
targets
-26%

Copyright © 2021 by Boston Consulting Group. All rights reserved.

20
2.0°C consistent 2°C
10
-43%
1.5°C consistent 1.5°C

1990 2000 2010 2020 2030 2040 2050

Note: Pledges & Targets includes the NDCs submitted to the UNFCCC and long-term or net-zero targets included in countries' long-term strategies submitted to the UNFCCC or adapted in law. It includes the
long-term and net zero targets of: Canada, Chile, Costa Rica, the EU27, Japan, Norway, Singapore, South Africa, South Korea, Switzerland and the UK. It also includes the announcements (yet to be
submitted to the UNFCCC) from Canada, China, Japan, South Africa and Ukraine. China's final intentions are unclear.
Optimistic Targets assumes implementation of the net zero targets by the US, China and others that have announced such targets but have not yet submitted them to the UNFCC
Source: Climate Action Tracker
3
International Conference on GREEN & SUSTAINABLE IRON MAKING
 Recent global accords increasingly underline the need for urgent actions to be taken to
address climate change with access to financing a key pillar of action

Consensus on energy transition elements Universal corporate recognition Recognized need for global peaking
incl tripling renewables, doubling energy towards climate change action - to occur by 2025 through deep
efficiency and phase down of fossil fuels focus on Scope 1 & 2 reduction emission reduction

Agreement on sector-specific resilience Need for region-specific agendas to Encouraged growth in RE capacity &

Copyright © 2021 by Boston Consulting Group. All rights reserved.

objectives and need for doubling of balance energy transition & energy improvement rate of energy
adaptation funding to close finance gap. resilience efficiency

NDCs to cover all emissions, sectors and Recognized cross-sectoral Concerns on significant net-zero
categories and have targets for 2035 (due innovation as a driver of transition financing required &
by end 2024) sustainability actions to mobilize funding

Loss and Damage fund operationalized,
$792M committed for capitalization
International Conference on GREEN & SUSTAINABLE IRON MAKING
Consensus on need to mobilize Limited clarity on timelines & goals
green transition funds faster with dependence on fossil fuels not
addressed
4
 Significant policy push towards climate ...and comprehensive financing initiatives
action by global powerhouses… to further green investments in US and EU
United States United States | $479Bn in climate and energy spending via tax
Inflation Reduction Act (IRA) credits along with adoption and localization incentives
Infrastructure Investment & Jobs Act (IIJA) 479 Implications for the private sector
Adoption of emission standards for the mobility sector 110

369 Reduce costs through sizeable incentives

European Union Total climate
Revamp decarb. plans basis shifts in clean tech
invest.
Revision of the EU Emissions Trading Scheme (ETS)
Funding from IRA Capture early mover advantage by proactively solving
Green Deal Industrial Plan (GDIP) for bottlenecks & pursue new value pools
Funding from IIJA
Activation of the Carbon Border Adjustment Mechanism (CBAM)
Introduction of energy efficiency & RE targets
European Union | Green Deal Industrial Plan (GDIP) proposes to
combine atleast €357Bn of EU-level green transition funds and
India
national-level state aid
BEE regulated development of the domestic carbon market TBD TBD
Launch of the Green Hydrogen Mission 357 290
40
26
Renewed push towards biofuels & renewable energy sourcing GDIP 1 2 3 4
Member State Aid REPower EU1 Invest EU Innovation
Fund
China 1 To be unlocked via loosened Focus on fuel switch via energy efficiency
3
Launch of the China Emissions Trading Scheme (ETS) state aid rules & RE power

Incentivization of electrification of mobility & wider RE adoption 2 De-risk early-stage green tech. 4 Address green premiums & fund net-zero
investments supply chains
International Conference on GREEN & SUSTAINABLE IRON MAKING
 India is committed to meet Net-Zero 2070 targets with actions underway on multiple
fronts
Indian green transition offers significant … with actions underway across multiple
potential for decarbonization … abatement drivers … … governed by multiple regulatory bodies
GHG Emissions (MtCO2e/year)
Renewable Energy
8,000
Biofuels
2030 NDC Target Under BAU
Paris Agreement 7,222
6,000 Green Hydrogen

Decarb
NDC-SDG Carbon Markets
4,294 space
Linkages
>4500
4,000 4,550
3,266 MtCO2e/yr. Key enablers
LTD by 2050
Government led regulatory
3,021 support & demand creation
2,000 2,542

Improved access to finance

0 Technology advancement & cost

2020 2025 2030 2035 2040 2045 2050 reduction

Note: NDC-SDG scenario: policies that leverage interconnections between India’s climate actions and Sustainable Development Goals (SDGs) for 2030; LTD (Long Term Decarbonization) scenario: policies with
high potential for greenhouse gas (GHG) emissions abatement in the long term; BAU (Business As Usual): outcome with no GHG reduction policy
Source: WRI report, BEE reports, PIB announcement, Press search, BCG analysis (2022)
International Conference on GREEN & SUSTAINABLE IRON MAKING
 Investments in India are increasing with a need to increase even further…

While green capital1 raised in India is growing, it Significant capital shortfall anticipated in India's
is a fraction of global capital target to achieve NDC commitments

Total India climate finance flows, 2017-2020 ($Bn)

45 43
Est. funds
17 21 needed pa >$170-200 B p.a.
till 2030
2017 2018 2019 2020

Total global climate finance flows, 2017-2020 ($Bn)

Expected
612 623 640 shortfall ~$100-150 B p.a.
546

2017 2018 2019 2020

Step-up needed to shape green financing in India

1. Including debt, M&A, and equity funding

Source: CPI, Business Standard; World Economic Forum; Council on Energy, Environment and Water
International Conference on GREEN & SUSTAINABLE IRON MAKING
 Representing 15% of the country's total emissions, the steel sector is a key
decarbonization target for India to meet its 2070 Net-Zero commitment

With a 2070 Net-Zero target, India is Short-term decarb. targets have been CBAM is expected to be a key decarb.
pushing to decarbonize hard-to-abate set for the industry which is expected driver due to India's heavy export
sectors like steel to grow at >5% CAGR till 2030 exposure

Decarb. policy actions at national level 2.64 Export exposure of iron &
Current Indian steel
• PAT (Perform, Achieve, and tCO2/ industry emission intensity $5.5Bn steel (>65% of CBAM-
Trade) scheme tsp affected exports)
• RPO (Renewable Purchase Obligation)
framework Impact on Indian steelmakers
• Vehicle Scrapping Policy 2.00 2030 industry emission
tCO2/ intensity target defined by 20-35% Equivalent tax per CBAM
the Ministry of Steel
tsp
Decarb. policy actions at industry level
650+ Tariff lines affected
• National Steel Policy still not at par with

• Scrap Steel Recycling Policy 1.85 Current Global average Lower demand in the EU
tCO2/ steel industry emission
tsp intensity Increased prices for
imports

International Conference on GREEN & SUSTAINABLE IRON MAKING

 Globally, the transition towards green steelmaking is well underway
The global green steel market is expected to witness …with demand from sectors with low material cost, …and supported by a projected drop in production
rapid growth… allowing premium transfer to customers… costs in the long run
Green steel market size ($ Bn.) Supply agreements for green steel Levelized cost of steel ($/tCS)

624.4 27 48 1,282
33%
19%
15%
11% 782 796
+124.0% 21 22% 676
588 569 559
516 538 492
81%
278.8
5% 14%

Transport Non-transport Total

55.6 Auto & auto sector Industry Appliances NG + Scrap-EAF H2-DRI BF with CCS Electrolysis
0.4 2.2 11.1 Heavy-duty Service & trade Others Offsets
Shipping Energy 2021 2050
2023 2025 2027 2029 2031 2032

Several initiatives ₤130 Mn. grant investments for research & pilots on clean steelmaking technologies as part of the
are in place to Research Fund for Coal & Steel supporting the EU Green Deal since 2021
drive the adoption of World's first batch of fossil-free steel produced using H2-based steelmaking tech. employed in
green steel Volvo's mining machine (2021)

Source: Bloomberg, European Commission, Company websites

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 Hence, in summary…

Demand for low-carbon steel likely to increase in a carbon regulated regime…

• As demand for steel increases domestically and globally, this demand will have to cater to
stronger/more stringent low-carbon/sustainable regulations

Transformation process has been kick-started, but India still needs to catch up. Both internal
and external environment to shape up
• Internally, newer technologies to be adopted ranging from Green H2 and CCUS to mature tech

• Externally, standard definition of Green Steel in India to be established

Decisive action on green initiatives and market creation required from Indian steel companies
• Pursue development and implementation of long-term science-based decarbonization
roadmap with definite short-, medium-, and long-term milestones
• Develop differentiated go-to-market strategy for Green Steel (both globally and domestically)

International Conference on GREEN & SUSTAINABLE IRON MAKING