Decarbonising India’s Heavy Industries: The Unfinished Roadmap
Heavy industries; steel, cement and chemicals form the backbone of India’s economy, but they are also responsible for nearly 30% of the country’s greenhouse gas emissions.
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This week on Eximius Echo, we explore the decarbonisation challenge facing India’s heavy industries—steel, cement, and chemicals—which together account for nearly 30% of the country’s emissions. While India aims for net-zero by 2070, these sectors still lack a clear roadmap. With demand for steel and cement set to triple by 2050, decisive action is critical to reduce emissions and meet sustainability goals. Join us as we dive into the unfinished roadmap for transforming India’s industrial backbone.
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Heavy industries; steel, cement and chemicals form the backbone of India’s economy, but they are also responsible for nearly 30% of the country’s greenhouse gas emissions. The scale of the problem is significant.
Steel alone contributes nearly 300 million tonnes of CO₂ annually, cement adds another 218 million tonnes, and chemicals, the largest industrial energy consumer, has no clear decarbonisation path. Unlike power generation, where renewables provide a clear alternative, these industries rely on high-temperature processes, fossil fuel inputs and carbon-intensive feedstocks that cannot be easily replaced.
With demand for steel and cement expected to triple by 2050, emissions could rise even further if no decisive action is taken. While India has set a net-zero target for 2070, there is still no detailed roadmap for these industries. Some efficiency improvements have been made, but deep decarbonisation remains a distant goal. This raises a critical question: where will the biggest shifts come from?
The Efficiency Gap: Cement Leads, Steel and Chemicals Lag Behind
India’s cement industry is often cited as one of the most energy-efficient in the world, largely due to the widespread adoption of waste heat recovery, blended cement and process optimisations. Despite this, cement production remains a major emitter because of the chemical reaction in clinker production, which inherently releases CO₂. Efficiency improvements have reduced emissions per tonne, but there is a limit to how much further this can go.
Steel and chemicals, however, are further behind. Steel emits 2.36 tCO₂ per tonne, contributing 12% of India’s total emissions, far above the global average of 1.89 tCO₂. Over 90% of production relies on coal-based blast furnaces, while countries like Japan and South Korea have shifted towards scrap-based electric arc furnaces (EAFs), which emit far less carbon.
Green hydrogen costs ($4-7/kg vs $1.8/kg for grey hydrogen) make hydrogen-based steel commercially unviable without subsidies. Carbon Capture, Utilisation and Storage remains expensive, energy-intensive, and largely unproven at scale. Limited steel scrap availability prevents widespread adoption of EAFs, while MSMEs lack capital, financing, and R&D support to transition.
India’s young blast furnace fleet (15-year average) locks in emissions for decades, and low domestic demand for green steel discourages large-scale investment. Without clear policies, financial incentives, and infrastructure, achieving low-carbon steel production will remain challenging.
The chemicals sector is even more complex, given the diversity of its processes. Ammonia production alone accounts for 50% of CO₂ emissions in the industry, largely because hydrogen is a key input and is currently produced from natural gas. Large-scale use of green hydrogen or electrification in chemicals remains commercially unviable, leaving few immediate options for emission cuts.
Unlike cement, where efficiency gains have already been maximised, steel and chemicals still have significant room for improvement. The challenge is how to implement meaningful reductions without disrupting industrial output or making products unaffordable.
Carbon Capture: A High-Cost Necessity
Carbon capture, utilisation and storage (CCUS) is one of the only solutions available for hard-to-abate industries, but costs remain a major obstacle. Capturing CO₂ from concentrated sources like ammonia production costs between $15-25 per tonne, but capturing emissions from dilute sources like cement kilns or steel blast furnaces can be as expensive as $40-120 per tonne. This makes CCUS a costly addition to already capital-intensive industries. While the commercial viability of green steel remains a distant prospect, several steel companies have started to make efforts to reduce their carbon emissions via green hydrogen, electric arc furnaces, and CCUS.
For cement, CCUS may be the only viable long-term solution to address emissions from clinker production. However, storage infrastructure is still lacking, and companies are yet to make substantial investments in commercial-scale capture. If costs do not come down, CCUS will remain a theoretical solution rather than a practical one.
Retrofitting vs. Greenfield: The Decarbonisation Dilemma
A major question in the transition is whether to upgrade existing plants or build entirely new low-carbon facilities.
Retrofitting existing steel and cement plants with CCUS, hydrogen injection or energy efficiency upgrades is seen as a faster and more cost-effective route in the short term. However, these measures can only partially reduce emissions. Cement kilns, for instance, will always produce some level of CO₂, even with the best efficiency upgrades.
Greenfield projects such as hydrogen-based direct reduced iron (DRI) steel plants or clinker-free cement production have the potential to fully decarbonise industrial production. However, these technologies are still in the early stages and would require billions in new investment. The first commercial-scale hydrogen steel projects are expected only in the late 2030s, meaning that retrofitting will likely dominate soon.
If India wants to stay ahead of global carbon regulations, it must ensure that new industrial capacity is future-proof. Retrofitting alone will not be enough in the long run.
The Next Big Innovations in Heavy Industry Decarbonisation
Several emerging technologies could provide a long-term solution for heavy industry emissions.
For example:
Green hydrogen is one of the most talked-about solutions. It can be used in steel production (via hydrogen-based DRI), in ammonia plants (to replace natural gas-based hydrogen), and in chemical refining. However, green hydrogen is currently 4/5x more expensive than fossil-based hydrogen, making large-scale adoption unfeasible. India’s 5 million tonnes green hydrogen target by 2030 aims to reduce costs, but it will take time before hydrogen becomes a cost-effective industrial feedstock.
Alternative fuels like biomass, waste-derived fuels and syngas could replace coal in cement kilns and steelmaking, but supply chain challenges remain. India’s cement plants currently use only a fraction of the alternative fuels seen in Europe, and large-scale adoption will require better infrastructure and government incentives.
Carbon capture is also evolving. Some Indian cement plants are exploring CO₂ mineralisation, where captured CO₂ is used to produce carbon-negative concrete. This could provide a commercial use for captured carbon, lowering the cost barrier.
Electrification is another potential route. Some industrial processes, such as chlor-alkali production and ammonia synthesis, could shift to electric power if India’s renewable energy capacity continues to grow. However, electrification is not a viable solution for high-temperature processes like cement kilns or steelmaking, where direct fossil fuel replacement is still difficult.
What Comes Next?
Industrial decarbonisation will be shaped by policy and investment over the next decade. The National Green Hydrogen Mission has allocated ₹19,744 crore ($2.4 billion) to 2029-2030 for hydrogen projects, and a national CCUS policy is expected to completely form by 2025. Large industrial players like Tata Steel and Dalmia Cement are already making investments in pilot projects, but wider adoption will depend on government incentives and market demand for low-carbon materials.
India’s heavy industries face a fundamental shift. Retrofitting will dominate in the short term, but true net-zero pathways will require entirely new industrial models. The decisions made in the 2020s will determine whether India’s industries can transition smoothly or risk falling behind global carbon regulations. This is no longer a future problem, and it must be solved now.
Start-ups will play a key role in accelerating industrial decarbonisation, bringing innovative solutions in carbon capture, green hydrogen, and energy efficiency. As we explore breakthroughs in steel, cement, and chemical decarbonisation, we are looking to connect with start-ups tackling these challenges.
If you are looking to build in this space, we would love to chat! Please reach out to us at pitches@eximiusvc.com.
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