How Tata Steel is fueling the global energy transition

• Steel is both a problem and part of the solution for green energy transition.
• Governments must afford better policies for decarbonization of steel. production
• New technologies are helping decarbonize the industry.

Tata Steel: Steel production is at the top of the list of climate change, with the industry viewed as one of the worst polluters. However, industry pundits now suggest that the industry may very well hold solutions for the ongoing global energy transition.

In an interview titled ‘Steel is part of the problem but is also part of the solution’ held with global steel giant producer Tata Steel’s CEO T. V. Narendran this month, the Indian leader in steel production alluded to the premise that steel production can go green.

According to the CEO, the company has been actively pursuing Environmental, Social, and Governance (ESG) ideals since its establishment in 1907. “For instance, founder J. N. Tata did not want the company to replicate the problems English laborers experienced during the industrial development of the 1800s, so he built workers’ accommodations close to steel factories,” the CEO explains in the interview. “ESG is a part of our DNA,” Narendran states.

In the 1920s, Tata Steel instituted an eight-hour workday, introduced free medical facilities for employees, and offered maternity leave. These were efforts taken centuries ago, what an about now? The CEO says the company has very recently been recognized as a sustainability leader by the World Steel Association and this is not a one off thing, on the contrary; “Tata Steel has received this recognition for the eighth year in a row,” the CEO reveals.

“The last couple of decades have been transformative,” he adds. Narendran goes on to discuss his effort to decarbonize Tata Steel, which according to him, accounts for $27.7 billion of the Tata group’s $165 billion in 2024 revenues and a major part of the group’s greenhouse gas emissions.

Notably, Tata Steel has grown it’s annual production capacity almost 10 times, from four million metric tons to 35 million metric tons, the CEO reveals. This growth has involved scaling up, in India for example, he said, Tata Steel has grown from been a sixth of the company’s business in 2008, and now comprises over two-thirds of their volume output.

“We have restructured and divested less profitable businesses, including reducing our scale in the UK from ten million metric tons to three million,” he revealed.

The company has also acquired unprofitable steel businesses in India and turned them into profit smelting enterprises. Which begs the question, what does that mean for the environment and sustainability?

“We have made greenfield investments and  organically built share in profitable segments, for example, our share of the high-end Indian auto steel supply is over 50 percent,” he revealed.

The CEO said the firm takes pride in the fact that it has built one of India’s largest consumer brands. “We have aggressively adopted digital; three of our sites have been recognized as World Economic Forum digital Lighthouse factories for their widespread use of advanced technologies in operations,” he said nothing that by going digital, the company is also going green.

He underlined with great emphasis that as the company continues to scale their India and European operations, the focus is making low-carbon steel and accelerating their sustainability journey. “We are preparing for an era of higher raw materials costs by investing downstream. Sustainability is central to our vision for the next decade,” he notes.

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Tata Steel decarbonizing production, challenges and opportunities

As the company looks to decarbonize production, it’s main product and raw material, steel, is central to the problem. However, the CEO would have stakeholders know that steel is also part of the decarbonization solution.

“The industry is responsible for about eight percent of the world’s carbon footprint. But you cannot transition to a fossil-free environment or a renewable-energy-driven environment without steel,” he explains.

He adds, “You cannot build without steel… to take just one example, without steel, there is no mobility. Steel must be a part of any solution to decarbonize the world. People underestimate the costs and complexity of this transition.”

Steel production is a capital-intensive industry, all along its global supply and distribution chains. Over the years, the traditional method of blast furnaces using coal has become increasingly competitive because according to the Tata Steel CEO; “Any other way of making steel costs $100 to $300 more per ton.”

“That’s more than the EBITDA margin of most steel companies. And then there’s the fact that, for now, customers must be willing to pay more for green steel,” he notes, adding, “Given all that, there’s no business case for the transformation unless governments offer some support through policies that make the transition viable.”

“Look at the geographies we serve. In the UK, where we have support from the government, we are on track to transition to greener steelmaking by 2027,” he revealed.

“That transition is well underway, as evidenced by the fact that we have closed our blast furnaces and are setting up a scrap-based steel plant,” he detailed.

Likewise, he said in the Netherlands, Tata Steel is in active discussions with the government about making the green transition. “With positive support from governments, combined with policies like the Emissions Trading Scheme that create an incentive to reduce carbon emissions, we expect our European footprint to be green by 2035,” he revealed optimistically.

However, on the downside, he said in other places like India, on the other hand, the transition lags because the country is a few years behind on its policy road map. “…and the country lacks a customer base willing to pay more for sustainability. Nevertheless, Tata Steel India has already started this journey,” he said remaining positive and optimistic.

“We are already one of the benchmarks for CO2 emissions from our blast furnace based facilities. We are also building a million-ton scrap-based steelmaking facility, despite it being less profitable than our coal-based plants. In some ways, we are ahead of the law and current policies in India,” the CEO detailed.

He explains that gas-based steelmaking can halve the industry’s CO2 footprint, while hydrogen-based steelmaking could bring it close to zero. “But we are a long way from hydrogen-based steelmaking being competitive with either gas- or coal-based steelmaking,” he admitted.

Reduce coal consumption

Currently, there are technologies that could help reduce coal consumption in blast furnaces by up to 60 percent including a method called EASyMelt. “EASyMelt can help significantly reduce the CO2 footprint of a blast furnace. It allows you to operate with 45 to 65 percent less coke input into the furnace but get the same energy output,” he detailed.

“This is a great example of a viable technology designed to reduce the use and impact of coal in blast furnaces,” he said.

Finally, the Tata CEO delved into Carbon capture, Utilization, and Storage [CCUS] as a must be a part of the eventual solution for the steel industry. Sadly, despute all these efforts he pointed to the reality that, the World Steel Association has forecast that in 2050, there will still be 700 million tonnes of blast furnace production, which means almost 1.2 billion tonnes of CO2, even after instituting other decarbonization actions.

“We need to find ways to capture that CO2 and either store it or convert it into something useful,” he advises, insisting that “Steel must be a part of any solution to decarbonize the world.”