Tracking Technology in the Indian Steel Sector
This is the second report in our series that analyses the state and outlook for the Indian steel majors in their ambition to expand capacity while meeting decarbonisation goals. Following our initiation report on JSW Steel, this edition focuses on Tata Steel.
Tata Steel has set an ambitious target of reaching net zero emissions by 2045. With the help of government funding, its European operations are making strong progress. In India, however, Tata Steel and its competitors are rapidly scaling-up capacity to meet market demand. Confirmed and announced asset expansion plans will grow the company’s domestic steel capacity by 54% to 40-50 Mtpa by the mid-2030s . Nearly all of this new steel capacity relies on coal-consuming blast furnace technology.
This report finds:
- Disconnect between net zero ambition, transition plan and coal-fired capacity expansion
- Our analysis indicates a disconnect between Tata Steel’s 2045 net zero ambition and their near-term Indian capacity expansion plans. Unless newly installed blast furnaces are subsequently retired (after median of 19 years use), without second campaigns to overhaul, refit, reline and extend the life of the furnace, Tata Steel India cannot deploy a single additional blast furnace without exceeding its own target budget. Tata Steel India’s transition plan lacks credibility – by not explaining how it will reconcile material coal-fired capacity expansion in India with its 2045 net zero goal
- Significant carbon lock-in risk from capital investments
- Tata Steel’s ongoing and potential future project capital investments amount to US$30bn globally, including US$24bn for Indian projects. This portfolio carries significant risk of carbon lock-in, with 60% of project capital globally and 74% in India categorised as high-risk.
- Limited ability to apply CCS due to location constraints
- Tata Steel India’s blast furnace strategy implies reliance on CCS to meet its 2045 net zero goal. However, aside from broader concerns about large-scale viability of CCS deployment, Tata Steel India’s production sites are located far from natural geological storage which represents an additional barrier to their use of CCS to meet their emission goals.
- Tata Steel India can stay within sight of its 2045 target and achieve 40-50 Mtpa by the mid-2030s
- This will require them to deploy 6 Mtpa of hydrogen-ready steelmaking via Direct Reduction-Electric Arc Furnace (DR-EAF) capacity by 2030/31.
