The secret reason metal makers are going green

This follows the European Union coming up with the world’s first carbon tax.

The tax aims to ensure that non-EU firms exporting to the EU pay the same price for their carbon footprint in Europe as EU firms do. Thus, through the carbon tax, the EU intends to bring the level of taxes on imports on par with that for local companies for green compliance.

“Export-oriented companies are trying to reduce the carbon footprint of their products in view of EU’s carbon tax. Given the potential of low-cost mineral, low-cost renewables and low-cost storage, India can become the hub for low carbon commodities to the world," said one of the persons cited above, requesting anonymity.

These metal majors depend on captive power production to meet their energy needs. India has around 78 gigawatts (GW) of installed captive power capacity, of which around 56GW is fuelled by coal and burns around 200 million tonnes of coal annually, according to industry estimates.

A case in point is aluminium as most electric vehicles (EVs) are made with using this light metal, as the storage battery is heavy. This has resulted in steel frames giving way to aluminium frames, and a major cost of manufacturing aluminium is energy. EV makers are now asking for green aluminium.

“We are looking at increasing the quantum of renewables in our energy mix, along with increasing energy efficiency of operations and replacing fuels with greener and cleaner options," said Rahul Sharma, chief executive officer, aluminium business, Vedanta Ltd.

“Vedanta aluminium continues to be India’s largest green energy buyer from power exchanges, having purchased more than 1,600 million units of renewable energy till date during FY22," he said.

This comes against the backdrop of distributed renewable energy generation attracting strong investor interest as the market has few developers with large portfolios. Commercial and industrial projects are generally insulated from risks such as power procurement curtailment and tariff-shopping by state-owned distribution firms. Third-party and captive consumers buy electricity from them, instead of depending on an expensive grid.

JSW Steel has already taken a big step forward in making its processes green, which also resulted in the company recently completing a sustainability bond issue in two tranches of $500 million each, said Seshagiri Rao, joint MD of JSW Steel and group chief financial officer.

“The issue with carbon border tax is of limited concern to us as we are moving faster on greening our steel making processes. We have already declared that carbon usage in our processes would reduce from 2.5 tonnes for 1 tonne of steel now to 1.9 tonnes of carbon by 2030. We are taking a lot of steps to reduce carbon emissions, including replacing fuel based power by renewables and increasing scrap usage in blast furnaces," Rao said.

Steel Authority of India Ltd is also not behind, installing a host of clean energy-efficient technologies such as BF top-gas pressure recovery turbine, coke dry cooling plants, waste heat recovery units at BF stoves and sinter plants, energy efficient reheating furnaces, and by-product gas based power plants. This has resulted in reduction of specific CO2 emission from operations by more than 9% over the last 10 years.

subhash.narayan@livemint.com