Green Steel

Green steel refers to steel produced using environmentally friendly processes, with a major focus on reducing carbon dioxide emissions associated with traditional steelmaking.

• Definition:

  • Green steel is produced using methods that significantly reduce or eliminate the carbon footprint of steel manufacturing.
  • It contrasts with conventional steel production, which is one of the largest industrial sources of CO2 emissions globally.

• Production Methods:

  • Utilizes renewable energy sources (e.g., wind, solar) to power the steelmaking process, instead of coal or other fossil fuels.
  • Employs innovative technologies like hydrogen reduction, replacing coal-based blast furnaces. Hydrogen acts as a reducing agent to convert iron ore to steel, emitting water vapor instead of CO2.

CABM Impact on Indian Steel Exports

Recent European Union actions have impacted Indian steel exports, particularly in the context of green steel, due to the following reasons:

• The EU’s revised Emission Trading System (ETS) and the introduction of the Carbon Border Adjustment Mechanism (CBAM) aim to reduce greenhouse gas emissions and promote low-carbon production methods.
• These measures increase the cost of compliance for steel producers not employing green technologies, thereby affecting the competitiveness of Indian steel exports that are more carbon-intensive.
• The CBAM imposes a carbon price on imports of certain goods, including steel, to prevent carbon leakage and encourage decarbonization outside the EU. This could make Indian steel less attractive in the EU market due to potential additional costs.

CABM

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy designed to prevent carbon leakage by imposing a carbon price on imports of certain goods, including steel. It aligns the carbon cost of imports with that of EU-produced goods, encouraging global decarbonization. The CBAM is part of the EU’s Green Deal, aiming to make the EU climate-neutral by 2050.