India is embarking on a significant policy shift with the introduction of the Carbon Credit Trading Scheme (CCTS), moving beyond its previous Perform, Achieve and Trade (PAT) Scheme. This new framework is designed to propel the nation's industrial sectors, particularly the energy-intensive iron and steel industry, towards greater carbon competitiveness and sustainable production practices.
Accelerating Steel Decarbonization
The proposed greenhouse gas emission intensity targets for the iron and steel sector under CCTS are expected to be a key driver for industrial decarbonization. Unlike the PAT scheme, which primarily focused on energy efficiency, the CCTS emphasizes a broader approach to optimizing greenhouse gas emissions through the adoption of advanced low-carbon technologies.
Parth Kumar, Programme Manager at the Sustainable Industrialisation Unit, CSE, notes that while initial targets may encourage improvements through operational measures and energy efficiency, the true impact will be seen in future compliance cycles. These cycles are anticipated to influence long-term investment decisions, fostering a deeper, structural shift in the sector's emissions trajectory.
Challenges and Opportunities for the Industry
As the world's second-largest steel producer with rapidly growing demand, India's choices today will define the sector's environmental footprint for decades. The CCTS is particularly crucial given the significant capacity expansion anticipated within the Indian steel industry.
Manish Dabkara, Chairman and Managing Director of EKI Energy Services and President of the Carbon Markets Association of India, highlights that the steel sector's CCTS targets are still undergoing finalization, unlike eight other sectors that already have definitive goals. This ongoing revision process underscores the complexity of setting fair targets across diverse production methods, such as blast furnaces versus electric arc furnace (DRI-EAF) plants.
Dabkara advises steel producers not to await final certainty but to actively engage in the current consultation window. By providing data and contesting numbers that may not align with their specific processes, companies can influence the final targets assigned to them. Proactive participation is seen as a strategic move to secure more favorable and realistic compliance obligations for the upcoming cycles.
Once the draft targets are finalized, the Bureau of Energy Efficiency (BEE) will oversee verification, and the assigned targets will become binding for the compliance cycle. This transition marks a critical juncture for India's steel industry, compelling it to innovate and invest in greener technologies to meet future environmental standards.