India’s coal-based sponge iron sector sits at the centre of a structural environmental problem —high-carbon, energy-intensive and deeply polluting. The latest flashpoint before the National Green Tribunal (Application No. 766/2024 filed by Climate Action Forum, an Odisha-based NGO) sharpens the clash between its CO₂ emissions and India’s net-zero ambitions. Backed by studies from TERI, IIT Bombay, CEEW, and McKinsey, the case challenges coal-based rotary kilns and pushes for cleaner alternatives like gas or hydrogen.
The Ministry of Steel (MoS) and Central Pollution Control Board (CPCB) acknowledge the concerns, yet no resolution has emerged, revealing a deeply entrenched policy dilemma. Notably, the plea focuses narrowly on carbon, overlooking the sector’s more immediate crisis: severe air pollution and solid waste.
MoS defends the sector’s economic role — supporting 2,000 MSMEs and ~40% of steel output — arguing a ban risks shortages and import dumping, seriously affecting India’s growth trajectory. CPCB, meanwhile, defers enforcement to states. The core challenge persists: balancing decarbonisation with industrial growth.
Flawed structure
India, the world’s largest sponge iron producer, relies on coal-based rotary kilns to produce sponge iron for steelmaking. Unlike the capital-intensive BF-BOF route, these units are small, decentralised, and clustered near coal and iron ore belts mainly of Chhattisgarh, Odisha, West Bengal, Karnataka and Jharkhand.
Their low entry cost has enabled 300–400 plants to support thousands of MSMEs and meet rising steel demand. But the flaw is structural. These plants use low-quality, unprocessed inputs, driving higher emissions and waste. Smaller units are often inefficient, with weak pollution control. The evidence is unequivocal.
The IIT Kharagpur report, as directed by the NGT, aligns with many other studies — there is broad consensus on both the environmental cost and the need for transition. The numbers are stark. Coal-based sponge iron via the EAF route emits ~4.1 tCO₂/tcs—well above the global average (1.91) and conventional BF-BOF route (2.5). Of the steel sector’s ~240 Mt CO₂ emissions, the secondary sector contributes ~50 Mt, with sponge iron accounting for 60 per cent. Each tonne produced emits 2.5–3.0 tonnes of CO₂, roughly double that of gas-based routes.
The pollution crisis
The sector is more notorious for conventional pollution than carbon emissions, yet the NGT plea largely ignores this. Producing one tonne of sponge iron consumes 2.5–3.25 tonnes of raw material, with the rest lost as emissions and waste, chiefly coal char. The handling of iron ore, coal, and limestone drives chronic air pollution in cluster regions, while coal char is often illegally dumped, compounding health risks. Most small plants lack adequate pollution control, safety, and efficiency, resulting in persistent pollution, unsafe operations, and frequent accidents. This has persisted for decades with minimal technological or regulatory push. Ad hoc responses — penalties or shutdowns — have failed. What is needed is a supported strategic transition: treat the sector as a partner, upgrade existing plants, and mandate cleaner technologies for new capacity.
Governance deficit, regulatory failure
There is little dispute: the sector is highly polluting and carbon-intensive, compliance is weak, yet it remains economically attractive and nationally important. Concerns trigger studies, notices, and penalties — but production continues, reflecting a deep governance failure. Despite being the world’s largest sponge iron producer, the industry remains largely unorganised, with poor documentation and weak oversight. Laws exist, but enforcement is misaligned with a fragmented, informal sector. The economics are equally flawed. Low input costs and minimal spending on pollution control and safety make the process appear cheap, while environmental and health costs are externalised.
This is no longer tenable. India may face ₹10–₹15 lakh crore in stranded asset risk if seen with the 2070 net-zero commitment, while the EU-Carbon Border Adjustment Mechanism (CBAM) could penalise exports ranging from 200–600% of profits. Yet new high-emission capacity continues to be approved. The disconnect is stark: law, policy, and practice are moving in different directions.
Roadmap for the sector
Shutting down coal-based sponge iron plants is neither feasible nor desirable. As the MoS notes, the sector underpins steel output, jobs, and growth, using domestic coal and low-grade ore. An immediate ban would be disruptive. But policy must move beyond this binary to a time-bound, financed transition—a distinction long blurred. The path is clear: retrofit existing plants and allow new capacity only with cleaner technologies and best practices. Expansion cannot repeat current inefficiencies. Efficiency gains — processed ore, combustion optimisation, waste heat recovery — offer quick wins; deeper cuts require gasification, renewables, biochar, and CCS. Better pollution control, real-time monitoring, and waste tracking are non-negotiable. This transition must pair incentives with enforcement — green finance, subsidies, and carbon markets alongside stricter norms. The choice is not growth versus environment, but between a managed transition and the unmanaged one underway. The NGT now has a chance to force that shift.
(Views are personal)