The government split the steel sector in two
India is building two different carbon mechanisms for steel, and which one applies depends on the size of the plant. Large producers go to the Carbon Credit Trading Scheme, where emission targets are mandatory and tradeable. Small producers are being offered Viksit Bharat Ispat, a proposed ₹5,000 crore scheme that pays incentives rather than charging penalties.
What the scheme proposes
Incentives would be linked to production, with the amount dependent on how far a unit cuts its carbon emissions, Steel Secretary Sandeep Poundrik said at a CII event in late September.
It is aimed only at small steel producers. Larger plants are being moved toward mandatory reduction through the trading scheme instead.
Cutting emissions would require better technology, better raw material and greater use of renewable energy, according to the Secretary.
The proposal still has to go before the competent authority for approval, so the design can change before it lands.
Why the split exists
The secondary sector covers roughly 2,550 units and close to 47% of India's crude steel capacity, and the draft National Steel Policy proposes support for their raw material access, technology, skills and safety.
A carbon price works as a lever only where a plant can afford the technology to respond to it. Splitting the mechanism by size is an attempt to avoid penalising units that cannot.
The steel notification under the trading scheme is expected soon, which would place the 255 largest units into the compliance market covered in this newsletter earlier in October.
Also moving
The government has notified a Steel Industry Safety Council following accidents at plants, including RINL and SAIL facilities. It will be chaired by the Steel Secretary, with the heads of integrated steel plants and representatives of small producer associations on it.
