India’s Green Steel Taxonomy — Emission Standards & Transition Challenges

CURRENT AFFAIRS | MARCH 2026

What is Green Steel Taxonomy?

• A classification framework that defines what qualifies as “green steel”
• Launched by Ministry of Steel in December 2024
• India became the first country globally to create a formal green steel taxonomy
• Purpose: standardise emissions benchmarks, enable green labelling, attract green finance

The Five-Star Rating System

• Rating is based on Scope 1 and Scope 2 emissions
• Scope 1 = direct emissions from steelmaking process
• Scope 2 = indirect emissions from purchased electricity
• Current Indian average: ~2.5-3.0 t-CO2e/tfs (BF-BOF route)

Pathways to Green Steel

• Hydrogen-DRI route — replace coal with green hydrogen; most promising long-term
• Scrap-based EAF — using recycled steel in Electric Arc Furnaces; target 50% by 2047
• Renewable energy — powering EAFs with solar/wind electricity
• CCUS (Carbon Capture, Utilisation and Storage) — capture CO2 from existing BF-BOF plants
• Energy efficiency — waste heat recovery, process optimisation

India’s 2047 Scrap Target

• India aims to increase scrap-based steelmaking to 50% by 2047
• Current scrap usage: approximately 25-30%
• Vehicle Scrappage Policy (2021) feeds into steel recycling ecosystem
• Circular economy approach: reduce, reuse, recycle in steel value chain

Transition Challenges

• Cost premium — green steel costs 20-30% more; market willingness uncertain
• Green hydrogen availability — India’s green H2 production still nascent
• Infrastructure — hydrogen transport, storage, and distribution networks needed
• Scrap shortage — India is a net importer of steel scrap
• Technology readiness — hydrogen-DRI at commercial scale is 5-10 years away
• Financing — massive capex needed for BF-BOF to EAF conversion

Global Comparison

• EU — no formal taxonomy yet, but EU ETS covers steel emissions
• Sweden (SSAB) — HYBRIT project, world’s first fossil-free steel (2021 pilot)
• Japan — COURSE50 project for hydrogen-based steelmaking
• India’s taxonomy gives it a first-mover advantage in standard-setting

Key Terms for CLAT

• Green Steel Taxonomy — Classification framework for low-carbon steel
• t-CO2e/tfs — Tonnes of CO2 equivalent per tonne of finished steel
• CCUS — Carbon Capture, Utilisation and Storage
• Scope 1/2 emissions — Direct vs indirect emissions
• Circular Economy — Reduce, reuse, recycle approach

Source: UPSC Essentials, The Indian Express — March 2026

Practice Quiz

Test your understanding with these 10 MCQs:

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