Hard to Abate, Harder to Ignore: Decarbonizing India’s Heavy Industry | ft. Girish Sethi

[Podcast intro]

Welcome to the season five of the India Energy Hour podcast. This podcast explores the most pressing hurdles and promising opportunities of India energy transition through an in depth discussion on policies, financial markets, social movements and science. Your hosts for this episode are Shreya Jai, Delhi based energy and climate journalist and Dr. Sandeep Pai, Washington based energy transition researcher and author. The show is produced by 101 reporters, a pan India network of grassroots reporters that produces original stories from rural India. If you like our podcast, please rate us on Spotify, Apple Podcasts or the platform where you listen to our podcast. Your support will help us reach a larger audience.

As India moves to reduce its coal dependence and reach its climate goals, the spotlight is turning to hard-to-abate sectors that are both energy-intensive and vital to economic growth. What would a realistic transition look like for these industries? And how can finance, policy, and innovation come together to drive change?

In this episode, we speak with Girish Sethi, Senior Director of the Energy Program at The Energy and Resources Institute or TERI to unpack one of the toughest challenges in India’s clean energy journey — decarbonizing the steel and cement sectors.

[end]

[Podcast interview]

Sandeep Pai: Welcome, Girish, to the India Energy Hour. We have interacted in the past, but I really wanted to sit down with you once to just explore the topic of steel and cement decarbonization, especially in the India’s, you know, net zero story and try to get a sense of that. But so welcome to the India Energy Hour podcast.

Girish Sethi: Thanks. Thanks, Sandeep.

Sandeep Pai: Great. So I think, you know, as per our tradition in this podcast, we would like to start with you and, like, with your story of different people take different parts to get into this energy climate space. There is no one set part. In fact, you know, I know people who are engineers and then got into the climate. I know people who are from English literature background. So we just want to start with you and your story, and how did you get into this space and yeah.

Girish Sethi: Yeah. No. Thanks. I think you’re correct. So in my journey in this field I’ve come across many people from different walks of life. So I am from the traditional engineering field in India. I think everybody gets into engineering. The parents tell you to, okay, engineering is a field. You should get into it, become a doctor or an engineer. So I was the one who preferred the engineering, field. So I got into chemical engineering. And, then, after completion, as is normally the trend, I think at that time, I followed in the deep into those days I passed out in 1985. So almost now forty years, I think. In fact, we celebrated our forty fortieth alumina a couple of weeks back. So, and that was the time when we got out and the best at that time was to getting into some state owned public sector companies. So I also got into, I, of course, got, into many fields, including the energy field, ONGC, and those kind of PSCs. But I prefer to get into the research area and join this entity called the the Cement Research Institute of India at that time. So you might have heard it’s called the national concept for cement and building materials. It’s a body which is under the Ministry of Industry and primarily caters to the cement and the building material sector in India. And that’s where I started my career. And that, in fact, exposed me to the cement sector. And in fact, that is a subject which you wanted to discuss today. So that really exposed me to the cement sector per se. In the college days, you just read 30. We just had one chapter on cement sector, but then that’s what, brought me into the real world of how, the industry functions and how you ideally see the full fledged machines. So I spent almost one year training, learning how cement is produced and both at a theoretical level as well as practically for a few months in in the cement factory. And I spent some time almost, I think, around six, seven years in CRI, sim, Cement Research Institute. And then just cement is a sector as you might be knowing. It’s a very highly energy intensive sector. So anything which you have to do was has to be around with energy and being on chemical engineering field. That was the area where you work on material balances, energy balances, things like that. So that brought, a lot of interest, to me on on this field. And then, actually joined, a master’s program in energy studies here at Delhi, at IIT Delhi. And, that I continued. And, then since that was energy field and then Terry came into the picture. And during that transition period, I switched over to Terry, the energy and resources here, which is primarily working in the energy environment sustainability field. And, almost now, I think I’m here for the last thirty thirty plus years. I think thirty two, thirty three years I’ve been at Terry. And then I think subsequently also while I was at Terry, I got the opportunity to really get an exposure internationally as well. And I did another masters again in the field, which is linked to energy climate. Those were early days you would remember, I think, that, UNFCCC, the COP, and all those things at that time. The the Rio conference was in 1992 at that time. So that really kept on moving in the climate direction and they did another masters from Germany, which was the industry of applied sciences. So it’s brought in that angle of how the development cooperation works and how energy and environmental factors work in.

So all in all, I think it was a typical field where you start with engineering. Can you get into a specific field? And here in Delhi, of course, I started again on industries with steel, cement, and all these areas. But, and all other heavy industries, and we are working ever since in topics related to energy efficiency, energy audits at area all these years. And then in the last round, I would say close around ten years, ten or about eight to ten years, I think, with this whole discussion on industry decarbonization or more so in the last five, seven years, I think. Started getting involved more closely into the aspects related to how these sectors like, steel and cement and other harder to build sectors should really get. Also, decarbonize slowly. What are the issues? What are the barriers? Things like that. So the role of green hydrogen and things like that. So that completes in a way, one, I would think that now that I started with cement, moved on to everything and down towards the later part of my career, I’m back to cement today. This is the karma. It just revolves around. So that’s how the whole journey has been all these years, around forty years or so. I’ve been working in this field now.

Shreya Jai: That’s quite a wide and long journey. And a lot of assignments and a lot of sectors that you have, you know, crawled and touched upon. Which has been your most, exciting, distance? You know? What did you enjoy the most? Which sector did you enjoy the most working in?

Girish Sethi: If you have since you’re asking this, so I would actually say that it was not really, these sectors seem to see which we want you to talk. I think some of the work which I did in the, mid nineties to, say, 2010 also around fifteen years in another energy intensive sector, which was actually glass manufacturing. That’s also very highly energy intensive. And those were small scale industries, actually. Because steel cement are big, large, heavy industries. So that was something which I really enjoyed. We worked on an area where nobody really wants to get into. It’s very difficult segment. And, as steady, we were supported by, so the research work, by some of the European partners. And we developed new types of furnaces, which were far more energy efficient, less carbon intensive, and supported the local small scale glass manufacturing industries in a small town called Surajabat, not very far from the city of St. Jagra, I think. I don’t know whether you have visited or not, but that’s a place where all the bankers in this whole country with the ladies wear glass bangles are manufactured. So I I still relish that effort. There’s almost fifteen year effort, and we converted the entire cluster into something which everybody today even calls it as a terry furnace. So since you asked, I I can relate that as some area which I it’s very close to my heart. And, I still try to remain in touch with those people who helped support my journey here in the energy field, in the industry field, in theory as well.

Shreya Jai: No. It’s a beautiful city and then a beautiful market and beautiful sector as well.

Girish Sethi: I think you’ll remember that if we can say in this episode, the since both of you are Indians, there’s this famous song, by Sri Delhi. Yeah. One of the Indian not not sure here or something of that sort. So that was shot in that city involved in the market there.

Sandeep Pai: Right. Right. No. I mean, I’m also thinking and reflecting, you know, in this broadly defined public policy space, it’s sometimes really hard to measure impact. Right? Like, because any topic, so many people are working on it. But, to really see a real impact, it is something very rare and something that you can pinpoint. So congratulations on that. I wanna now move to the topic, of today, which is really focused on a very strong and important topic of the future, which is decarbonization of steel and cement. So before we start, I just wanna do one o one of this so listeners who are not from this field kind of understand, you know, broad understanding of where the steel and sec cement sector is at. Who are the players? Are these mostly state owned companies or PSUs? What are the short term and long term targets in these two sectors?

Girish Sethi: Yeah. Hindsighting. So let me start with the okay. Let me start with the cement sector. Since I started my journey with the cement sector. So maybe, I would like to just mention for everybody that, the cement industry in India is, primarily, I would say, almost 100% is actually with the private sector. It’s almost 100% private sector. Maybe there’s just one, straight owned company which is still there, one or two. But mostly, the entire thing you can say is actually a private sector. And you all have all big large players, hardly any sport players. There are a few mini civil plans, but majorly, it is all the large major civil plans in the country. Big players like well known names like ACC and Ambuja, Dagmia, UltraTech. And, what is interesting here in the cement sector is that it has gone through a very interesting cycle. You did have some international players in the Indian cement sector till a few years back. But now you see mostly the whole industry is dominated by the private sector, the Indian owned private sectors. So whether it is the Jindal group, the Jindal JSW, or it is the Dalmias. I think the ACCM Puja, which is owned by Adani’s. So all these are there. But earlier, till a few years back, we did have Lafarge and the whole stadium and, couple of others. We do have Heidelberg’s image still in India, but they are not the major player. So it’s dominated by Indian owned companies, and they are doing pretty well, I think. So in terms that’s in terms of the major players which we have in the cement sector. In terms of the process and the how the industry is structured, let me say that the Indian cement industry is now the most energy efficient cement industry in the whole world as of today.

I’m not saying not just in developing countries, including the developed world, in terms of the specific energy consumption levels. Many of the plants in India, both in terms of the thermal energy consumption levels as well as in terms of the electrical specific nitrogen levels. We have plants which are the global best. But, yes, averages are slightly higher. But, mostly all why mostly almost all the plants are 99.9% are dried plants. And the Indian civil industry over the years has adopted the best available technologies which are available from around the world, whether it is the Europeans, from the Germans, the Danish, or the Japanese, which newer new developments which have come. And one of the reasons I would also say is that why the Indian industry has become very, very efficient and they have been adopting the best practices globally is because the first, of course, is the growth of this country as a whole. And, similarly, something which is used for daily construction, whether it’s a small household thing, or in the large infrastructure projects. So you have new demands coming in all the newer developments which were happening around the world. So they were being adopted by the machinery manufacturer by the Indian civil industry. In terms of the total production, I think today we have close to around six twenty five million tons of cement produced in the country, maybe slightly higher. And, that is the production capacity where the production is slightly on the lower side, around four twenty five to four thirty million tons of cement is produced. And India is the second largest producer of cement globally, next only to China. And, also in terms of the types of cement which are produced, this was the knowledge. So we, for the audience, so I think the we produce almost 75 to 80% as a blended sense, whether it is the Portland slag cements or the Portland poster on the cement, which basically uses fly ash. This is a byproduct from the thermal power plants. And only around 25% less than around 20% is the ordinary Portland cement. Whereas you will find in many countries actually around the world, it’s practically opposite. I was actually two weeks back, I was in, South Korea again on a cement related conference. And, in my presentation, I had to say this that, because the first presentation was by the South Koreans, the Korean civil industry. And they said that we are 80% OPC and 20% blended. I said, for me, it’s the opposite in India. So we are pretty efficient in terms of using the secondary arm teasers as well. So, in this is a broadly the structure, I don’t say. So large producer, but the fact is that since the country is growing, per capita is actually still lower, and there are possibilities of, further growth.

We are close to around presently, around 250 kgs per capita, whereas the global average is around 540. So we are still half of that. So that’s broadly on the cement sector, I would think. Close to, I think, around, I think around one 60 or so large integrated cement plants. And, also, very interestingly, India is one of the countries which has separate clinker manufacturing, just increase their intermediate product. And then you have the cement, which is a final product. So you have, a situation where you have only grinding plants very close to the places where the fly ash is generated or where the slag is emitted. So you can transport the clinker and then have that. So we have separate independent grinding plants also in the country close to around, I think, one twenty, one twenty five grinding plants are there. So that’s on the cement structure industry structure since you are asking.

On the steel, it is slightly different. Again, we do have large players in the Indian steel sector. You have the big names like Atara Steel, the Jindals, the JSW, JSPL. And we do have one of the oldest, public sector unit sale, the steel part of India, which is still very active. They have a few plants mostly in the Eastern side. Yeah. On cement, I would say that again, in terms of the location as a country as a whole, we do have cement. It normally will be plants located next to the places where you have the limestone deposits. And steel is mostly concentrated in large numbers in the Eastern part of India in the states like Chhattisgarh, Risa, Jharkhand, West Bengal, and a few also in the southern part of our country. So we have those large players in the industry sector, but we do have those are in terms of the structure. So larger players, and then you also have the comparatively smaller players, which are, again, located quite a lot in the Eastern Belt of the country. They are using a technology which is maybe I’ll come to that later if you want to discuss. So but I think in this in terms of structure, so we have large players. We also have smaller players in the cement in the steel sector. And then you have still smaller players who are mostly using the, scrap melting route. So Indian steel industry is that way very, very different than the global similar industry that we fund would like to, global steel industry, let me put it. Because we have not just the big units like the blast furnaces to produce the crude steel. We also have, DRI unit which are based on non coking coal, which is the only India’s only country which is having this kind of a structure. And we also have small sized electric furnaces, which are scrap based furnaces. So the structure is very different. Again, in terms of the capacity, if you look at the steel sector, similar to the cement, we are the second largest producer of steel globally next again only to China. Again, the per capita spiel consumption is close to around 100, but, again, the border which is higher. So huge opportunities close to around 141, 50,000,000 tons of spiel produced in the country. And absolutely, very high growth prospects in terms of the new capacities which are coming. So broadly on the structure of the industry for both steel and cement, In cement, it’s all big large players. In steel, you have large players as it is competitive with smaller players. In terms of the cement, we have industry which is very efficient, latest, state of the art in many cases. In steel, we do have smaller players which are very different from the large ones, but broadly following the BFB of route as well as this. Sorry for a long answer because I think it’s important to really put that into the perspective if we are really wanting to talk about how do we really make these industries more efficient and make up this.

Shreya Jai: No. That was extremely helpful. It gave a very comprehensive overview of the sector and, also opened the path towards something that, you know, we are discussing, in this particular episode of the podcast. I’ll just steer a bit, into, you know, the reliance that this country has on coal. And, steel and cement sector is usually, you know, imposed as a villain in this sector because of their huge reliance on coal, then their reliance on imported coal as well. So, you know, in this debate of coal dependence, where is the steel and cement sec?

Girish Sethi: Yes. You are correct. I think so. Apart from the power sector, which is the largest user of coal in the country, the next two biggest sectors are cement and steel, actually. So, I would say that, in case of steel, broadly, one will put the core into two block buckets, the coking coal and the noncoking coal. So mostly the thermal coal is non coking coal, which is used in the, power plants. So the steel industry, the blast furnaces which we have, so they normally require coking coal. So India is importing maximum large quantities of coking coal. We don’t have huge reserves in India. So we are dependent on coking coal. But we also have these I mentioned earlier about this, comparatively smaller plants, which are called coal based DRI plants. Direct reduction of iron DRI is the short form of, direct reduced iron. So there, they can they are using a noncoping coal, which is available to domestic millions, sometimes also the import. So the country is usually dependent sees it as hugely dependent on coal. They are just, I think, 3 or 4 plants which are having gas based, DI production and that too in the Eastern side of the country, on the Western side of the country. Same way in the cement sector, I think we most of the plants are using, majority of plants are using coal as a major fuel, but they are also are dependent. Some of them are also using large quantities of petroleum coke, pet coke. And lately, I think, some of the plants have started using, other alternative fuels like, I would say industrial waste, so already residues, or MSW waste, ready tires, things like that. But still the dependence is heavily in both the sectors on coal.

Sandeep Pai: Yeah. So that is actually a good segue for my next question, which is looking towards the future. Given this dependency on coal, like, globally, there are lots of technologies that right now, I mean, you can correct me if I’m wrong, but these are all technologies of the future, and there are some pilot projects. But where is the Indian steel sector and the cement sector at in terms of, you know, moving away from coal based, coal based production of steel and cement to other forms using hydrogen or other other sources? What’s happening in that space, and how it has evolved?

Girish Sethi:  Yeah. I think, let me start with, say, steel. So steel, you rightly say, I think that hydrogen has been talked about quite a lot, I think, as an option now for the industry to move forward and start using hydrogen produced from renewable energy sources as they call it as a clean hydrogen. So, yes, that is definitely an option. But I would also like to mention that as of now, if you really look at that globally and globally, I would put Europe as a center in this case because countries like Sweden and Germany and quite a few and some of the other ones have been talking about hydrogen based steel production. Even today, as of today, you don’t have a full fledged large commercial plant operating 24 by seven on hydrogen based direct production. Yes. The technology has been the supplier and says that it is there. So hydrogen will definitely become a major, I would say, hydrogen based production of iron and then ultimately steel will definitely become part of the major, transition pathways for decarbonization pathways for the Indian steel industry. But till the time one really sees, the costs so what is inhibiting that? So one, of course, is the cost for hydrogen based DRI production versus the conventional technologies which are already there, whether it is a natural gas based, DRI production or on cold based DRI. So that is a cost issue.

But, also, I would say, at the same time, the important thing also would be the role of the raw materials which actually are needed for a high deal based area production. So for example, in case of Sweden, as I understand, I think they have a very good high grade, iron ore available, very high quality. Whereas in India, iron ore broadly is thought of that high grade quality. So you would need some more preprocessing or better, access to that. So hydrogen surely becomes as one option, one can move. The other thing which people keep on talking about is the possibility of CCU. But I would say that there are other things which these are all medium to long term options which we can talk about. Of course, one can say that, yes, when the price of hydrogen comes down, then one can move very fast and swifter and quicker and get into hydrogen production. But, till that time that we don’t see the prices for hydrogen green hydrogen coming down, there are many other options where I think the Indian steel industry must move forward, whether it is in terms of, energy efficiency. But still there are options available in all the plants on this cap utilization on, the role of renewable energy, RE, circularity, material efficiency. So all these areas become very, very important in, fully decarbonized steel sector for that matter. In case of cement, the story is slightly different. Yes. People have talked about hydrogen use, but this at least in case of steel, we you do see some projects in, under construction and likely to come on full steam in Europe on hydrogen use in, steel. But incidentally, you don’t see that, actually, even in the developed world. So the other option and the only option which they say for full decarbonization of the cement is the CCUS, CCS plant. And that too, again, one of the first plants was just commissioned last month in Dravet on CCUS. Again, that is not fully decarbonized. So, again, in case of cement, you do have other options where one should move forward. And luckily, as I mentioned, Sandeep, earlier, I think that we are using blended cements in the big time in India. So which means that we are using all these secondary supplements, SCMs, which we call it as supplementary cementitious materials. So we are using it in large quantities. We can still increase the quantity in some form and still have a lower clinker factor. So that would be one of the biggest options moving forward in case of the cement. The other option, of course, would be the other decarbonisation measures which we can talk about there. But in terms of the fuel, in cement, yes, you can theoretically say that I can electrify your kiln, but there’s no electrified kiln today operating anywhere, and they’re actually coming from, say, renewable energy sources. Yes. We can on the fuel move towards alternative fuels, things like, biomass or other waste fuels which are available. And this is where I think India is lacking. So let me put it that you have plants in Europe, in Korea, elsewhere around the world where they use this waste, fuels in big time. Whereas in India, we have not been able to utilize the waste fuels in such large quantities. I think if I’m not wrong, the total percentage of alternative fuels, which is used in India’s industry is close to 5 to 7, 5 to 6% still. Whereas in Europe, you can find, plants which are using thirty, forty, 50. And I think you even heard that this is where they can go all the way to 100% alternative fuels.

Sandeep Pai: I’m so glad you explained. You know, a lot of people in this space I’ve seen, they’re obsessed with full transition, you know, in the sense that you use fuel as a source, coal as a source, move away completely. But I’m so glad you nicely described there are things that can be done, which perhaps may not lead to a complete transition, but will definitely do savings in terms of emissions and all of that. Why is the industry not jumping on these opportunities? Is it still expensive to for all the other opportunities like you said?

Girish Sethi: I would say that I think in case of cement, if you see, Indian industry has been very, very active. So as I mentioned, I think so we are using all these supplementary cementitious materials. Now the other issues could be, can we still further increase the blended cements in terms of increased percentage of fly ash? Then the issue comes on the standards. So the process of having because cement is something which is a mandatory standard. So you need to amend the standards. Again, very nicely, I would say that, apart from slag and fly ash, the other option in cement is, others other newer supplementary cementation materials. So, globally, I think in some parts in Europe, even the FICA, like, you were in all developed. They were called as a cement, which is called the l c three cement. So that has become one of the talking points globally. And, l c three cement is something the limestone limestone calcined clay cement, l c three in short form to say. And, that can use calcined clay. So the clinker factor is lower around point five. So you can use these clays which are available in large quantities as the same in different parts of the country. But, again, it’s a process which will take its own time in terms of identifying the sources, the mining of these, consigned clays. And and I would also like to measure very clearly that cement is a sector where it’s a bulky material. You just can’t transport from one part of the country to another part. So the cost economics of all these other c cementitious materials are available where they are close to the cement plant sites, that that would play a part or not. So India, after a long process, I think in 02/2023, we, also got this standard for MC three now, which was notified by the Bureau of Indian Standards in 02/00/2023. And I do understand that some of the cement plants are now looking at, producing LC three, which will require some modifications in the process. And, it’s again a story where since you asked why so with this example, for example, for l c three, somebody has to demand that new product.

And that’s a very typical thing. So you should have the demand for the low carbon product as well. So who is the one who’s going to demand that? It has to be real estate developers, big, infrastructure players. So somebody has to really demand for that. So it’s also a bit of a, I would say, chicken and egg kind of situation that, yes, is there a demand for the new product which I produce from a manufacturer side? And from that, I said, oh, why I don’t have it. How why should I be using it? So that is as an example I’m saying. But in many other areas, I think the industry has been doing well, at least the cement industry. On the scrap also, I would say in case of steel, yes, the country has been using. We do keep on talking about people say increase the scrap percentage because it’s circular economy. But I always ask this question. In a in a country like India, do we throw anything? We don’t throw anything. Scrap is used fully. Maybe we can improve the collection process. The the productivity can slightly increase, But we don’t throw anything well. So we use scrap fully whatever is available. So there are revenues available, but on energy efficiency, yes, things are possible in smaller plants. One can do that. We as I mentioned, in some plants, we have the best available, but there are others who are not meeting the global standards. So 10 to 15%, seven to 8% depending upon which plant we are talking about, those options exist. We can surely move towards I, big time. Neeram plants, which are captive plants, which are still using old subway waste plants so they can start using at least for new installations, we can start using RE for the electrical energy. But I think I would also like to mention you and I think all the viewers, all the, people who are listening to this, that it’s important that electrical energy can play only a limited role in this whole story. It’s in not just in these two sectors, but in the industrial sector, We did some research, some back of the envelope research over the last few years. Let me say that out of the total energy which is consumed in the industrial sector as a whole, almost 70 to 80%, 75, 80% is actually in the form of heat, thermal, and only 20% electrical. So even if you shift everything to RE based electricity, we still are not moving. So so that’s again another point I just wanted. But, yes, nevertheless, moving towards RE is definitely an option, on the electrical side. And, I that’s all I would say, basically. The new binder and new research is happening on new technology issues here.

Shreya Jai: That that’s great. You mentioned about how RE is a option in electrical energy.  I, on that topic, I wanted to discuss a bit about industrial decarbonization. India has this, you know, set its own targets for, you know, greening, increasing the share of non fossil fuel energy, and everything. Though industrial decarbonization is a part of our energy transition plan, though there are no set targets. So, you know, can you tell us, are there any government policies around steel and cement sector which aim towards their decarbonization? What is actually happening on the policy front?

Girish Sethi:  Yes. You are correct. I think so one should see these in tandem. One cannot say about industry decarbonization and energy transition steadily as I just explained. So energy is an important component in all these industrial sectors. Like in India, just taking a step back. If you really look at the overall energy consumption in the country, almost 55 to 60% or close to 50 to 60,000,000 is actually consumed by the industries. If you look at the total pie, close to 300,000,000 tons of oil equivalent is actually used in the industries. So industry becomes one of the largest users of energy. In some countries, it is not that case, but in not this much level. But for India, it is almost 50 to 60% is or the total energy which is consumed in the country is actually in the industries, followed by transport and buildings and residential and agriculture sector. So it’s very difficult to really, say that industry decarbonization is different than energy transition. So if industries have to if energy transition has to happen, we have to have industry moving towards, low carbon options. Now on the policy side, let me pull it from the industry perspective. So the first one, at least on the steel, I would say that the we have in India what is called the Ministry of Spiel. And perhaps I would say the only country in the world which has got a separate Ministry of Spiel. So which is a big, big advantage, I would think. So over the last three or four years, we have seen a lot of action, proactive, programs, policies from the Ministry of Steel in India. And after almost two, two and a half years of discussions, deliberations with the various departments, with the various players, The Ministry of Steel came up with the document which is called the greening of steel in India, GSI. So this very, very detailed document which was published by the Ministry of Steel, was released in September 2024. It’s not even one year back. And it has it was a process where they created, I think, around 13 task forces on different topics ranging from all the efficiency, scrap, palletization, many topics including cross sectoral issues like skilling and, RE. So all these task forces worked for many, many months and came up with this very comprehensive detailed app called, which is available on the Ministry of Steel website. And we at Teri are lucky that we were part of almost seven of these task forces. And many other organizations have contributed to that apart from the main steel industry players. So that is a very comprehensive document, and they are coming up with newer and newer policies. And one of the first things which they have, the Ministry of Steel, which has come up is a definition on the taxonomy of, steel sector in India. What would you call it as a green steel or a green if we have said that I want a green steel, so what is it green steel? We need to have a taxonomy. So they have formally come up with a green steel taxonomy of India, and this was again released in, just six months back in December 2024. And, they are coming up with the new GPB program, the green public procurement program that is used to be coming up. Their consultations are going on with the various ministry including the, I think, demonstrative finance. So in this new, that’s only for green steel, they have already decided or given the definition for what would you call it as a five star green steel or a four star green rated steel or a three star green rated steel. So there have been emission intensity numbers which have been notified, which have been suggested by the steel. So if you are below 1.6 tons of CO two equivalent per tons of finished steel, it will be a five star green rated steel. And, if it is between 1.62, it will be a four star green rated steel. And if it is two to 2.2 tons of, CO two per ton of finished steel, it would be a three star green steel. So but let me mention that presently, we don’t have anybody producing even at this level. The average is 2.4 and above, I think, 2.5 in some cases. So that’s a big step forward. So that would be something which one will look forward. So the order will be yeah. Through the mystery of steel has already come up with this. The other most important thing I would also like to mention in terms of the policy which you mentioned is the national green hydrogen mission, which the government of India announced two years back. And it’s almost 19,800, I think, around $3,000,000,000 of total government incentives for green hydrogen production. So this is in two forms. One is for the incentives for actual green hydrogen production. The other is for electrolyzer production. And in the that’s around 18,000 crores. And already, bids have been floated and some of the companies have already been awarded these kind of, incentives by the government and one will see some action, more, productive action in this area.

In addition, let me also say that as a part of the National Renewal Mission, they have come up with a separate small program, which is to gain a pilot demonstration projects for, where government is going to provide support for pilot demonstration plus projects on green steel production. So again, those have been announced. And, similarly, on the cement side, I think on CCUS, the Department of Science and Technology announced a few initiatives just a few weeks back where some of the Indian companies have, it’s more on the r and d side. Again, I think the example which I mentioned about the l c three seven, that’s a standard which was under development. So again, a very nice move towards moving towards a low carbon cement. So that is again our initiative of the Bureau of Indian Standards and, many of the institutions have come forward to support that. So there are quite a few, I would say, initiatives where the God of India has, been supporting. The apart from God of India, I would say that the road maps for both cement and steel have been put in the public domain. The road map for a net zero Indian cement sector was prepared by the Global Cement and Concrete Association, GCC India, etcetera. Terry supported them in developing that.

So it was released in the month of March year. That’s available on the website. So if Terry as well as GCC, it lays down the pathway how the industry is going to move. Similarly, many other organizations, including Teddy have come up with the road maps for the steel sector as well as the use. So that shows that there is a real vibrancy and there’s an interest of the industry as well as the government to really move in that direction of, green steel and green cement production. I would just like to mention that from from that perspective. So green hydrogen mission is one of the key areas I think where one has to move in that direction, I think. And then, of course, DPI always coming up with its own plan. So there are multiple actors at various levels which are, acting state level. There’s various states in in the country have come up with their own green hydrogen policies. So there are incentives and programs which will be in place in the in the coming months in years.

Sandeep Pai: Wonderful. I think this is so so nice and clear just from a layman perspective as well. I just wanna move the the conversation towards the direction of finance. Now whether it’s green hydrogen, whether it’s any other incentive, and it will require some finance.

And in the context that the consumer right now perhaps is not asking for green steel or greener, forms of cement, are there financial mechanisms available that larger companies in the cement sector or smaller and larger companies in the steel sector can use, say, carbon markets or others that perhaps they can use to, you know, to adapt some of these new technologies even if they’re currently, more expensive? Yeah. I think, since you mentioned about carbon markets, of course, Shay asked about the policies. I didn’t mention about the performance even trade scheme, which has been the a very, very successful program of the ground of India running for the last many, many years, which is a program which is, supported by the Bureau of Energy Efficiency. So it’s a program where it was a mandatory program where targets are given to the large industrial consumers to reduce their energy consumption in a given three year period. So from the baseline, you have to reduce it to a particular level. So different cycles of the pack, have been announced over the years. And, now this whole pack program has been, kind of, changed over to what we are calling in India as the CCTS carbon credit trading scheme, CCTS. And it was again a process where the amendments were had to be made to the Energy Conservation Act and, it went through a proper, government process. And now this whole carbon credit trading scheme, CCTS, is actually in place.

Just a few, months back, four sectors were already notified, which includes cement, aluminum, chloroquine, and pulp and paper. And a few more sectors, including iron, steel, fertilizers, textile, and others will get added in the coming months and weeks, I guess. And, this CCTS scheme will have the baseline, which is 33, 34, and we will and this will be linked to this patch cycle, which I had mentioned earlier, the cycle seven and eight. So we will have a full fledged GCTS system in operation in in this country now, the common credit trading scheme. And, this will be managed under the normal protection act of 1986, unless unlike the pact which was under the energy conservation act. So, you will have almost all the obligated entities in the cement sector, which is close to around 180, 190, cement plants, which will be part of the CCTS scheme. And a fairly large production program has been kind of notified for that. So that will be one avenue I would think which will be moving the needle in in the right direction. But let me mention, this point that all this will be only incremental in my view. What we are talking about in terms of of large scale decarbonisation, whether it is in the form of a hydrogen DI as an option or CCUS as an option, these are very, very huge costs which we are talking about. And for that, apart from the the incentives which are available from National Green Hydrogen Mission, I don’t see any other major domestic state or initiatives which have been announced. So to me, international financing will have to play an important role, if we need to have this deep, deep carbonization options moving in the country, specifically in terms of some a few initial pilot plants, whether it is on green hydrogen, DRI, or a CCU or a CCS plants for the steel or cement sector. So to me, international finance will really have to play an important role, at least to have the first few, plants up and running in the country. We’re not saying I’m not saying that the whole fuel full cost will have to be born, but at least the incremental costs, in such cases. And it’s important to know that CCU or CCS is an add on cost.

So, that’s one important point on the financing I would want want to mention. And, also, I think, equally important is the whole story of the CapEx and the OPEX. In case of hydrogen DRA, it’s the whole issue is related to OpEx. So today, if I’m not getting hydrogen at a price which is comparable to the total cost of steel production, which is coming from coking coal, It’s very difficult to really see any, specific, steel, sector player fully moving quickly into that. So they will be looking at how this, compensation happens or how things will be moving in that direction.

So to me, it’s a story of the CapEx and the OpEx, how the prices for hydrogen come down over the years, and then the industry will be moving in that direction. And international finance will have to really play an important role in in all these, aspects, I would think.

Shreya Jai: If I may ask, about this carbon market, a little more because, you you know, this upcoming carbon credit market in India, albeit the voluntary or involuntary, is fine, peeling its hope a lot on the steel and cement sectors, because of being the major suppliers. But the market currently remains, you know, voluntary. It has not been made mandatory. I just wanted to get your thoughts on this. How much of a success would it be, if it would be made mandatory first? Second, firstly, should it be made mandatory? Second, what is the outlook of it, in India specifically?

Girish Sethi:  No. I think I let me just mention. So maybe I’m, what I want to convey is that the PAT program which was there, Alisa Perform Achieve and Trade Scheme which was there in India, which was actually the savings in terms of, energy, tons of oil equivalent, were actually a mandatory program. So the CCTS for these obligated entities, because that’s the word which they’re using, obligated entities. So there have been targets which have been given for, as I mentioned, for example, for the cement sector, for this 186 obligated entities, the target of close around 264,000,000 tons of CO2 equivalent has been given, and the reduction target is around 3.6%. Similarly, for other sectors like aluminum and others, the targets have been given.

For steel, again, they’ll be giving. So those would be obligated, mandatory targets which will be given. Now what I was trying to explain was that this is again a very small part. But to get into a situation which is telling somebody to okay. Go in for a full fledged hydrogen DRI pad. So these carbon markets cannot I know. It’s my personal view. They cannot play a major role there. There again, I think the whole issue is of the technology, the the the demonstration plants, the pilot plants. So those kind of things will really have to play an important role. And there it comes the cost of the initial capital and the role of, international finance, which will have to play an important part in that. So, voluntary markets, yes. Anybody wants to go beyond that is good. But we but to me, it’s important that one has to recognize the fact that these are new technologies. As I was mentioning, like, in case of, Steve, for example, if we are just talking about a hydrogen DIY plant, you need to ensure that, yes, the technology works with the Indian raw materials, with the Indian ovals and the Indian side conditions. And even to reach that level, you need to me, I would think that you need a lot of effort to really get the preliminary reports, the DPRs, the the the full face plan specific support. So all that is very, very important. So the risk capital and those kind of things will be very, very important to really get us to those levels of, how we really derisk the whole investment in in in these kind of newer areas or the newer sectors. So access to low cost capital, derisking investment by whether it’s early stage support for RD and D kind of things or even in any other newer PLI schemes, GPPs. So there could be many ways to really, accelerate that whole process, which will de risk the investments in these high high new areas.

Sandeep Pai: Right. Wonderful. I think we had a great conversation. We’re almost up at the hour, but I have to ask you this last question before before we close, which is really about, like, Girish, what should be the, you know, short and medium term goals for the next five to ten years? What what should be some few three or four things that should happen for for India’s to really accelerate? I understand that there is a policy, a little bit of policy landscape. A lot of people are thinking about it. But what should really happen to to see some pilot projects, to see some real, you know, big projects on the ground?

Girish Sethi:  Well, I would think as, just at the risk of repeating myself, so I would think that there are still many areas, in both these sectors, steel and cement, but also the other sectors as well in the industrial sectors where energy efficiency can play a role, specifically in medium and small industries, small and medium industries. Yes. RE can definitely play a very important role. So in the immediate next few years, one should continue focusing on these aspects of, energy efficiency, RE, circularity. In parallel, I think it’s very important, according to me, to play the ground for a full fledged demonstration projects on hydrogen DIA in India. Whether it is through a support by a special global vehicle from the government of India. In fact, Terry came up with its with the policy brief on on this topic that, maybe an SPV or something or that sort needs to be created to set up the first full fledged to handle India account in the country. Whether the international community can play a role in providing low cost finance, whether it is in the form of extremely low cost loans or in terms of the upfront capital incremental grants for, first of its kind plans. So to me, this groundwork in the next three to four years for a final investment decision for such kind of facilities will play an very, very important role. See, India does have a $20.70 net zero target, which is not the case for many other countries. We think, oh, we have. But to me, these assets, like the steel plants, they have a long gestation period, thirty, forty, fifty years many many times. So it’s not a long time from that angle if one looks at it. So it would be very prudent to have these low carbon, demonstration plants or a full fledged plant up and running and saying that in the first part of the next decade, if I would say by 2030, 2035, or ’20 between that period. But the construction and all these things does take time. So to me, the groundhog for a full fledged facility of this kind would be very important to move forward apart from the low hanging fruits that we keep on talking about in all these sectors.

Sandeep Pai: Thank you so much. Honestly, this has been a treat just sitting down with you and talking. And just thank you for explaining, you know, in very simple terms, the big picture, the nuances, and the path forward. I learned a lot. So thank you once again.

Girish Sethi:  Thank you. Thank you, Sandeep. Thanks a lot.

Shreya Jai: Thank you. Thanks a lot. It was a very comprehensive and informative episode, and thank you for joining us.
Girish Sethi: Thank you. Thank you. Thanks a lot for having me.

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