India’s Green Steel Supply Rises To 12.4 MT, But Demand A Challenge: CEEW

 

New Delhi: India already has a sizeable supply of certified green steel, but weak demand from government and private buyers could hold back the sector's growth, according to an analysis by the Council on Energy, Environment and Water (CEEW).

The analysis found that as of March 31, 2026, around 90 steel producers had received ratings under India's green steel taxonomy, covering 12.40 million tonnes (MT) of certified production. Of this, around 9 MT across 66 producers was rated 5-star, the highest category.

CEEW said its assessment indicates that nearly 40 MT of steel production could qualify as green steel by 2026-27, including around 24 MT that could receive a 5-star rating, assuming steel producers meet the draft emission-intensity targets under the Carbon Credit Trading Scheme (CCTS).

India's steel sector contributes around 10-12 per cent of the country's total CO₂ emissions, making decarbonisation of steelmaking important for India's climate goals.

 

Mohit Kapoor, Sustainability and Innovations Advisor for the All India Iron and Steel Federation (AIISF), told ETV Bharat that the potential emissions reduction from large-scale green steel procurement is significant. “The potential is significant. India's Green Steel Taxonomy sets 2.2 tonnes of CO₂e (carbon dioxide equivalent) per tonne of finished steel, as the threshold for green-rated steel, with progressively lower emission levels receiving higher ratings. Therefore, every million tonnes shifted towards lower-emission production can potentially avoid hundreds of thousands of tonnes of CO₂, depending upon the conventional production route being replaced,” Kapoor said.

He said government infrastructure, Railways, automobiles, construction and private procurement could collectively create a strong market for green steel. “Green steel will scale not merely because India can produce it, but because somebody is willing to buy it,” Kapoor said.

 

On cost, Kapoor said there is no single premium for green steel, as costs vary depending on the production route, including scrap-based electric steelmaking, renewable energy integration and hydrogen-based direct reduced iron.

He said government policy modelling has considered green premiums of around 10-15 per cent in some procurement scenarios, adding that the additional cost would need to be shared across producers, government support, green finance and customers willing to pay for lower-carbon products.

The CEEW analysis, however, argues that costs may not always be a major barrier. It said steel emissions could potentially be reduced by 8-15 per cent without increasing costs, through energy efficiency measures and renewable energy usage.

 

The report also highlighted a gap between India's Green Steel Certification Framework and the CCTS. Of the 12.40 MT of certified green steel produced, only 1.69 MT from eight plants is covered under the CCTS framework, largely because the two systems use different emissions-accounting boundaries.

The CEEW said quality and scrap availability remain challenges, particularly for scrap-based induction-furnaces. It recommended strengthening scrap collection and modernising secondary steelmaking to ensure green steel meets requirements of sectors like infrastructure, automobiles and defence.

 

AIISF's Kapoor said wider adoption could also bring benefits beyond carbon reduction. “Greater scrap utilisation, cleaner electricity, energy efficiency and reduced dependence on fossil fuel-intensive processes can also lower particulate matter, SO₂, NOx and other pollutants associated with industrial combustion,” he said.

“This is particularly relevant for communities around major steel clusters. Green steel should therefore not be viewed only through the lens of carbon accounting or Carbon Border Adjustment Mechanism (CBAM) compliance. The real dividend is wider: Lower carbon globally, cleaner industrial clusters locally, and healthier communities ultimately,” Kapoor said.

 

The CEEW has called for government agencies to prioritise certified green steel where prices are comparable, disclose the quantity and star rating of the green steel used in public projects, and encourage private companies to disclose their green steel consumption.

The think tank said India now needs to move from establishing a green steel certification system to creating sustained demand through public and private procurement.