Carbon Accounting for Steel Companies in India

Carbon Accounting for Steel Companies in India

India's steel industry is a global powerhouse, ranking as the world's second-largest steel producer. However, this prominence comes with significant environmental responsibility. Steel production is among the most carbon-intensive industries globally, with emissions typically ranging from 1.8 to 2.0 tonnes of CO₂ per tonne of steel produced using conventional blast furnace-basic oxygen furnace (BF-BOF) technology. For Indian steel companies, accurate carbon accounting is no longer optional - it's a regulatory imperative under India's sustainability framework.

This blog explores the emissions landscape of Indian steel manufacturing, regulatory requirements, and how companies can establish robust carbon accounting systems to meet disclosure obligations and identify decarbonization opportunities.

Steel Industry Emissions: Understanding the Challenge

Why Steel Produces Such High Emissions

Steel production is inherently energy-intensive. The transformation of raw iron ore into finished steel requires sustained high temperatures, chemical processes, and significant fossil fuel consumption. The 1.8-2.0 tCO₂/tonne benchmark reflects direct process emissions from chemical reactions, plus indirect emissions from energy consumption. This means a company producing 1 million tonnes of steel annually generates approximately 1.8-2.0 million tonnes of CO₂ equivalent.

Indian steelmakers face particular pressure because many still rely on older, less efficient technologies. Understanding your baseline emissions is the critical first step in any decarbonization strategy.

The Three Primary Emission Sources in Steel Manufacturing

Blast Furnace Operations

Blast furnaces are the dominant technology in India's integrated steel mills. They reduce iron ore using coke (derived from coal) at temperatures exceeding 1,500°C. Scope 1 emissions from blast furnaces include:

• Direct combustion of coke and coal
• Chemical reactions during iron reduction
• Fugitive emissions from the furnace itself

For a 500-tonne daily blast furnace, emissions can exceed 1,200-1,500 tonnes CO₂ daily.

Coke Ovens

Coke production is an upstream step often operated at integrated mills. Coke ovens generate significant emissions through:

• High-temperature carbonization of coal
• Process fugitive emissions
• Sensible heat in coke discharge

These are typically classified as Scope 1 emissions and are often overlooked in simplified carbon inventories.

Electric Arc Furnaces (EAF)

EAFs, used in secondary steelmaking and scrap-based production, have much lower direct emissions (0.4-0.6 tCO₂/tonne) but significant Scope 2 emissions from electricity consumption. The carbon intensity depends entirely on grid mix - renewable-powered EAFs can achieve sub-0.3 tCO₂/tonne emissions.

BRSR Disclosure Requirements for Steel Companies

Regulatory Scope: SEBI's Top 1,000 Listed Companies

The Business Responsibility and Sustainability Reporting (BRSR) standard mandates climate and emissions disclosure for India's largest listed companies. Key steelmakers subject to BRSR include:

• Tata Steel - India's largest integrated steelmaker
• JSW Steel - Second-largest private steelmaker
• Steel Authority of India Limited (SAIL) - Leading state-owned producer

These companies must disclose comprehensive Scope 1, Scope 2, and Scope 3 emissions, targets, and progress against science-based pathways. BRSR specifically requires steel companies to report:

• Absolute GHG emissions by scope
• Emissions intensity (tCO₂/tonne of steel)
• Year-on-year emissions trends
• Climate transition plans with detailed decarbonization pathways
• Board-level climate governance structures

What BRSR Means for Your Carbon Accounting Program

BRSR compliance demands that your carbon accounting system covers all facilities, uses standardized emission factors, and enables year-on-year comparisons. Many Indian steelmakers are adopting digital carbon accounting platforms like Greenio to ensure consistency across multiple mills, geographies, and data sources.

The disclosure requirement extends beyond compliance - stakeholders now evaluate investment decisions partly on carbon metrics. Accurate accounting directly influences access to capital, particularly from ESG-focused investors.

Carbon Credit Trading Scheme (CCTS) Opportunities for Steel

Steel as an Eligible Sector

India's Carbon Credit Trading Scheme positions steel as a priority sector for early action. Steel companies can earn carbon credits (Indian Carbon Credit or ICC) through verified emissions reductions against a baseline intensity benchmark.

How CCTS Works in India provides a detailed overview, but the mechanism is straightforward: if your facility's emissions intensity falls below the sectoral baseline, you generate saleable carbon credits.

Earning Credits Through Efficiency Improvements

Realistic pathways for steel companies include:

• Coke rate optimization - Reducing coke consumption per tonne of hot metal
• Blast furnace injection - Substituting coke with alternative fuels (natural gas, biomass)
• EAF adoption - Shifting scrap-based capacity from integrated routes
• Waste heat recovery - Capturing furnace sensible heat for power generation
• Raw material quality - Using better ore grades reduces energy demand

A company reducing specific coke consumption from 550 kg/tonne to 520 kg/tonne could generate meaningful credits, translating efficiency gains into tradeable assets.

FAQ

What emissions data must Indian steel companies disclose under BRSR?

Steel companies must report Scope 1 emissions from furnaces and coke ovens, Scope 2 from purchased electricity, and Scope 3 emissions across supply chains. Reporting must use GHG Protocol methodologies and include baseline year comparisons and targets.

How do I calculate emissions intensity for my steel mill?

Divide total GHG emissions (in tonnes CO₂e) by total steel production (in tonnes). A mill producing 1 million tonnes with 1.9 million tonnes CO₂e emissions has an intensity of 1.9 tCO₂/tonne steel.

Is our company eligible for CCTS carbon credits if we operate an electric arc furnace?

Yes. EAF steelmakers are eligible. Credits are generated when your actual emissions intensity beats the CCTS baseline. Baseline varies by facility type and technology.

When is the next BRSR disclosure deadline for steel companies?

SEBI requires annual BRSR reporting. The next filing deadline for fiscal year 2025-26 is typically by September 2026. Check SEBI's latest guidance for your company's specific deadline.

How does using a carbon accounting platform improve BRSR compliance?

Platforms like Greenio automate data collection, standardize emission factor application across facilities, maintain audit trails, and enable real-time tracking against targets - reducing manual errors and strengthening disclosure credibility.

Conclusion

Carbon accounting for steel companies in India is both a regulatory mandate and a competitive advantage. With BRSR disclosure required for India's largest steelmakers and CCTS carbon credits offering financial incentives for emissions reductions, robust carbon accounting infrastructure is essential.

Whether you're filing your first BRSR report or optimizing a mature decarbonization program, establishing clear measurement baselines is foundational. As an operator of steel facilities in India, your carbon accounting system should integrate facility-level data, use standardized methodologies, and align with both BRSR and carbon accounting for manufacturing companies in India best practices.

The transition to lower-carbon steel is underway. Companies that measure accurately, report transparently, and act decisively on decarbonization opportunities will lead India's steel sector into a more sustainable future.