India's Ministry of Power has released draft emission targets for 255 steel units under the Carbon Credit Trading Scheme. The goal is to reduce the national average emission intensity from 2.54 tonnes of CO2 per tonne of crude steel to 2.2 tonnes by 2030. Starting in FY 2026-27, individual plants will face reduction mandates ranging from 2.1% to 9.3%, with stricter requirements for higher emitters. The steel sector contributes roughly 10-12% of India's total CO2 output. The Blast Furnace-Basic Oxygen Furnace route accounts for 42.7% of production, while the more emission-intensive Induction Furnace route makes up 35.4%. Only 21.9% comes from the cleaner Electric Arc Furnace route, which has recently contracted. This creates a risk of carbon lock-in as coal-based capacity expands. Companies with older, more carbon-intensive plants will face higher compliance costs and may need to invest in cleaner technology. Investors should watch how these mandates affect profit margins and capital spending, especially for smaller players relying on conventional production methods.
