India's steel sector cannot decarbonise through electrification or renewables alone. CCUS is essential.
India's steel sector produces approximately 125 MT of steel annually and is growing at 6–7% per year to support the National Infrastructure Pipeline, housing construction, and automotive demand. The sector emits approximately 280 MT of CO₂ per year — about 11% of India's total emissions — from two fundamentally different production routes: blast furnace-basic oxygen furnace (BF-BOF), used by SAIL, Tata Steel, and JSW for integrated flat products; and direct reduction iron-electric arc furnace (DRI-EAF), used by the sponge iron sector and by Tata Steel's Jamshedpur operations.
Steel's carbon challenge is unique: a large fraction of its emissions are from the use of carbon as a chemical reducing agent — coke in the blast furnace reduces iron ore (Fe₂O₃) to iron (Fe), producing CO₂ as a necessary chemical by-product rather than a combustion waste. Switching to hydrogen-based DRI (H₂-DRI) eliminates this chemical CO₂ but requires enormous quantities of green hydrogen that will not be available at Indian cost and volume within the timeframe required by CBAM and India's Net Zero 2070 commitment. For India's existing steel fleet, CCUS is the only near-term decarbonisation pathway.
India's steel CCUS challenge is complicated by a production structure that differs from European and Australian steel sectors. India uses coal-based DRI (rotary kiln coal gasification) for approximately 45 MT of its DRI production — a route with no commercial precedent for CCUS integration anywhere in the world. NCM is conducting the world's first systematic feasibility assessment for coal-based DRI CCUS integration, drawing on NCM's pre-combustion capture expertise and India-specific coal characterisation data.
India's annual steel production — world's second largest, growing at 6–7%/year
Annual CO₂ from India's steel sector — 11% of India's total emissions
India's coal-based DRI production — unique globally, no existing CCUS precedent
Year by which CBAM will impose full carbon costs on Indian steel exports to Europe
Technology selection depends fundamentally on the production route — BF-BOF, DRI-EAF (gas-based), or DRI-EAF (coal-based).
Post-combustion capture on blast furnace top gas (20–25% CO₂) and basic oxygen furnace off-gas (up to 45% CO₂). Tata Steel's carbon capture project at IJmuiden (Netherlands) and POSCO's studies provide reference design. Applicable to SAIL's Bhilai, Rourkela, Bokaro; JSW's Vijayanagar; Tata Steel's Jamshedpur.
Natural gas-based direct reduction (Midrex, HYL/Energiron) produces CO₂ from SMR reforming and shaft furnace off-gas. Post-combustion capture on shaft furnace off-gas is technically proven. HBIS Midrex CCS pilot in China. Applicable to Indian gas-based DRI operations in Andhra Pradesh and Odisha.
India's unique coal-based rotary kiln DRI route produces a mixed CO₂/CO flue gas requiring pre-treatment before capture. No existing commercial CCUS reference. NCM is conducting the world's first systematic feasibility assessment for coal-based DRI capture — a potentially critical insight for India's 45 MT/year coal DRI sector.
An advanced blast furnace variant that captures and recycles top gas CO₂ back to the furnace as a reducing agent, reducing coke consumption and capturing the remaining CO₂. Tata Steel and SSAB pilot plants. TRL 5–6 but promising for Indian large-scale BF operations.
European ultra-low CO₂ steelmaking research routes — HIsarna (Tata Steel), smelting reduction with integral CO₂ capture. TRL 5. NCM monitors for Indian greenfield applicability by 2030s new capacity additions.
Multiple steel facilities sharing CO₂ transport and storage infrastructure — the Teesside cluster model applied to India's Jharkhand-Odisha-Chhattisgarh steel corridor. Reduces per-tonne CCUS cost by 40–60% for individual plants. NCM is developing the cluster framework for this corridor.
India exports approximately 15–18 MT of steel products to the European Union annually — making steel India's largest CBAM-exposed sector by both volume and value. Under the EU CBAM's full implementation from 2026, Indian steel exporters must either demonstrate verifiable CCUS-based decarbonisation or pay the EU carbon price on the embedded CO₂ in their exports. At current EU ETS prices of approximately €60–80 per tonne CO₂, the annual CBAM liability on Indian steel exports to Europe could exceed USD 1 billion by 2030.
JSW Steel, Tata Steel, SAIL, and RINL — India's major steel exporters — are all evaluating their CBAM exposure and the CCUS investment required to protect their European market access. NCM has conducted CBAM liability assessments for two of these major exporters and is in active discussions with the others. The conclusion in each case is consistent: CBAM creates a commercial case for CCUS investment that does not require any government subsidy — the cost of CCUS is lower than the cost of CBAM liability over a 10-year horizon.
The Indian government's response to steel sector CBAM exposure is still developing. NCM is working with the Ministry of Steel and NITI Aayog to design a sector-level CCUS support mechanism — drawing on the UK's Carbon Capture Contract model and Australia's Safeguard Mechanism — that provides the revenue certainty required for FID without creating a permanent subsidy dependency.
Indian steel exports to EU annually — largest CBAM-exposed sector by value
Estimated annual CBAM liability on Indian steel exports by 2030 at current EU ETS prices
CO₂ per tonne of Indian BF-BOF steel — 50% above EU average due to coal-heavy production mix
Horizon over which CCUS investment is lower cost than CBAM liability at €60+/t
NCM's steel sector advisory begins with a production route assessment — characterising each plant's blast furnace or DRI configuration, gas composition, thermal integration, and physical site constraints to determine which capture technology is technically and economically optimal. For BF-BOF plants, we draw directly on Tata Steel IJmuiden's capture experience and the ArcelorMittal Dunkirk project. For gas-DRI operations, we apply the HBIS Midrex CCS pilot data. For coal-DRI operations, we apply our own proprietary feasibility assessment — the only such assessment currently available anywhere in the world.
Our steel sector clients receive an integrated advisory product: CBAM liability quantification (how much CCUS do you need to protect EU market access?), technology selection (which capture route is right for your production configuration?), site-specific feasibility (what will it cost at your plant, in your location, under Indian conditions?), and finance structuring (how do you fund it with DFI capital, CBAM savings, and carbon credits?).
NCM is also developing the framework for India's first steel CCUS cluster — a shared CO₂ transport and storage infrastructure serving multiple steel plants in the Jharkhand-Odisha-Chhattisgarh corridor. This cluster approach, modelled on Net Zero Teesside in the UK, could reduce the per-tonne CCUS cost for individual plants by 40–60% and represents the most commercially viable pathway for rapid CCUS deployment across India's steel belt.
Whether you are a government body seeking policy advice, an industrial company facing CBAM exposure, or an investor seeking CCUS project opportunities — our team is ready to engage.