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Breathe Easier: Indian Steel Industry Makes Strides in Decarbonization

Renjini Liza Varghese


The steel industry’s decarbonization has been the main focus because it is essential to meeting the world’s net-zero emission targets. However, the cost of green steel production, lack of incentives, and regulations have created hurdles. But the good news is that the goal is achievable. While the cost of producing green steel may not be a hurdle for a few, regulations and price incentives are essential to drive the shift in investment and consumption towards green steel production, at large.

Undoubtedly, steel production is a major contributor to global carbon emissions, accounting for about 8% and roughly 30% of the segment emissions, respectively. In addition, the steel sector is also the leading consumer of coal, a key source of the heat and carbon required to convert iron ore into steel.

The good news is that the domestic primary steel producers are set to achieve their goal of reducing carbon emissions. According to a recent report from rating agency Crisil, Indian steel companies had set an ambitious target of reducing carbon emissions below 2 tCO2/tcs by 2030. The industry has already made significant progress. Steel manufacturers’ reported carbon emissions have decreased from over 3 tCO2/tcs in fiscal 2005 to 2.35 tCO2/tcs, which translates to a 65% reduction in targeted emissions.

The report also highlighted the benefits of emission reduction. Reducing emissions broadens fund-raising avenues, improves export competitiveness, and has a positive impact on credit quality. However, Crisil acknowledges the challenges that lie ahead to completely transitioning to low-carbon steel, also known as green steel.

Shifting Towards Low-Carbon Steel Production
Coal-fired steel plants are major contributors to CO2 pollution. To address this challenge, companies are exploring alternative solutions, such as using low-carbon energy sources like hydrogen, coal gasification, or electricity for steel production.

Meanwhile, media reports in China indicate that the nation’s steel industry could reduce carbon emissions by as much as 11% by 2025 if the government sets a more aggressive goal for the use of electric arc furnaces (EAFs).

Cost of Green Steel Production

The cost of green steel production in comparison to traditional methods and the viability of large-scale production are important considerations in this discussion. While the cost premium exists, it is not as high as initially feared, depending on the production location and method. The cost premium for green steel can range from negligible to around $150 per metric ton.

Crisil previously discussed the difficulties that Indian steel producers may encounter as a result of the EU’s CBAM. This mechanism may result in a 17% increase in the cost of India’s steel exports to the EU. When paired with greenflation, the overall effect might reach 40%.

The CBAM Deadline:
As per CBAM regulations, exporters will need to submit quarterly reports on their emissions starting October 1, 2023. From December 31, 2025, they will be required to purchase Emissions Trading System (ETS) certificates to offset their greenhouse gas emissions. Initially, industries will be granted free allowances to ease the transition, but these allowances will progressively disappear by 2034. The ETS tax will then become applicable to the portion of emissions not covered by free allowances.

The Indian steel industry is emerging as a frontrunner in decarbonization. Their significant progress in slashing emissions, exceeding halfway to their 2030 target, is a testament to their commitment to environmental stewardship.

 

 


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Agriculture in carbon credit fold

Sonal Desai


The Indian farmer will now be a part of the carbon credit ecosystem. Thus, the Indian agriculture sector is stepping up efforts toward sustenance through sustainability.  

The Union Minister of Agriculture & Farmers’ Welfare and Tribal Affairs, Arjun Munda, recently launched the Framework for Voluntary Carbon Market in the Agriculture Sector and Accreditation Protocol of Agroforestry Nurseries. 

Carbon trading in the agricultural sector involves buying and selling carbon credits generated by practices that reduce greenhouse gas emissions or increase carbon sequestration. 

Carbon credits are used to offset CO2 emissions under the Cap-and-Trade guidelines set by the Paris Agreement. Farmers can participate in carbon credit schemes by adopting practices like no-tillage farming, precision nitrogen use, cover crop planting, agroforestry, soil organic carbon management, and livestock and manure management.

The agriculture sector is vital to the economy and livelihoods of millions, employing 54.6% of the country’s workforce.

The announcement is a welcome step in the Indian agriculture sector, which is stepping up efforts toward sustenance through sustainability. It has a two-pronged approach:

  • The framework aims to encourage small and medium farmers to avail of carbon credit benefits, accelerating the adoption of environment-friendly agricultural practices. 
  • The Accreditation Protocol of Agroforestry Nurseries will strengthen institutional arrangements for large-scale production and certification of planting material to promote agroforestry in the country.
Carbon credit and the Indian farmer:

India’s agriculture sector has over 40 carbon credit projects, with pilot programs paying $10-30 per acre per year, according to various studies. By mid-2023, hundreds of farmers could receive payments for climate-friendly practices.

One project that immediately comes to mind is Boomitra. A project enrolling 100,000 farmers across 300,000 acres, Boomitra, has sold millions of dollars worth of soil carbon credits to companies aiming to reduce their carbon footprint.

Similarly, hundreds of Indian farmers could receive payments for carbon credits issued for implementing climate-friendly practices that reduce carbon emissions. 

Carbon farming improves soil health and reduces GHG emissions, contributing to climate change mitigation. It involves science-based techniques like cover crops, optimized tillage, and fertilizer management. Regenerative farming methods, based on traditional farming methods, reduce soil disturbance, end synthetic pesticides, maximize soil coverage, promote crop rotation, and combine livestock rearing with crops. These methods are applied to degraded lands.

Agriculture and carbon emissions: 

Globally, agriculture is historically linked with emissions. 

In India, various studies estimate that agriculture in the country contributes 14% of total GHG emissions, with 54.6% due to enteric fermentation, 17.5% from rice cultivation, 19.1% from fertilizer, 6.7% from manure management, and 2.2% from field burning of agricultural residues. The impact of climate change rises to extreme standards in North India, especially during the winter. 

The Central government, local governance bodies, and global agencies are making a concentrated effort to stymie the impact of carbon emissions on the planet and the livelihoods of the medium and small farmers who form a major chunk of the agriculture segment. 

Center-state-local-global collaborations:

As a result of the collaborative efforts, the Indian agriculture sector is leaning toward sustainable farming practices. IFFOs and Agtech companies are championing the cause of regenerative farming methods. 

Some of the methods include:

  • Combining livestock rearing with crops and other plants.
  • Maximizing soil coverage through living roots and mulching
  • Promoting crop rotation and improving biodiversity
  • Reducing soil disturbance due to tillage
  • Using mob grazing and manure/compost to minimize the use of synthetic pesticides and fertilizers
End-note:

The agriculture sector in India is undergoing a sea change. The critical aspect is the beneficiaries are directly involved in the process and the resultant change. Although it will take a while for the impact to be visible, I believe that INDIA is being prepared to embrace a new, tech-driven, organic, and inclusive farming activity. 

At WriteCanvas, we are of the view that the hands that feed us should have equal access to quality and natural yield on their dinner table! 


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Rockefeller Foundation injects $5M into Amazon Reforestation Fund

WriteCanvas News


The Amazon Reforestation Fund, an investment project started by Mombak, a Brazilian firm committed to generate top-notch carbon credits by reviving the Amazon’s forests, will receive $5 million from The Rockefeller Foundation. This financial donation is a part of a bigger $100 million funding plan created to support the largest biodiverse reforestation project with a goal of removing carbon from the region. Because of this assistance, Mombak will have the ability to increase soil health, boost biodiversity, extract carbon, and create opportunities for local residents that are economically viable.

“Nature-based solutions could help reduce one-third of the necessary global emissions by the end of the decade, but remain grossly underfunded, with an estimated $700 billion financing gap per year,” said Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation.

“The Rockefeller Foundation is proud to help close this gap by investing in Mombak’s innovative model that seeks to remove carbon by reforesting the Amazon,” he added.

The company’s first project in Northern Brazil will plant three million trees with more than 100 native species, including 200,000 seedlings of endangered species. Over one million trees will be planted by next month, including endangered or vulnerable species such as Cedro Rosa (Cedrela fissilis), Castanheira (Bertholletia excelsa), Itauba (Mezilaurus itauba), Mogno (Swietenia macrophylla), and others. The first project has also had a positive impact on the region, creating over 50 formal jobs in the local municipality. It is expected that Mombak will kick off multiple additional projects of this kind before the end of 2023.

“The Rockefeller Foundation’s investment reinforces the integrity of our projects,” confirms Peter Fernandez, CEO and co-founder of Mombak. “One of the biggest issues in our industry is trust. We are working to create the world’s highest-integrity carbon projects.”

Mombak’s business model is centred on the creation, verification, and sale of carbon removal credits. It does this by reforesting Brazilian pastureland using native and biodiverse tree species to rebuild the forests of the Amazon. The additional carbon abated from the atmosphere from these new forests produces high-quality carbon removal credits. The credits are then sold via both spot sales and long-term customer offtake agreements.


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