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- India’s aggressive push for new steel represents everything askew with its global role in mitigating carbon emissions and its pretence about protecting the rights of Indigenous communities.
- Moreover, the steel ministry is pushing for new investments when the country’s production capacity is already higher than its current production and demand.
- The energy intensity of the steel sector has shown little change globally. It is still highly reliant on coal – which meets 75% of its energy demand. India’s steel sector is notably worse.
Earlier this month, the Union minister of steel, Ram Chandra Prasad Singh, inaugurated ‘Steel Week’ at the Indian Pavilion at Expo 2020 in Dubai. The event showcases India’s potential in the sector and invites investors from the UAE, a press release from the Union government said. The event, reflecting India’s push for new investments in the sector, happened against the backdrop of ongoing unrest against a newly proposed steel plant near the Paradip port in Jagatsinghpur district, Odisha.
The aggressive push for new steel represents everything askew with India’s developmental ambitions, its global role in mitigating carbon emissions, its pretence about protecting the rights of Indigenous communities and its regard for public health and safety. Moreover, the steel ministry is pushing for new investments when the country’s production capacity is already higher than its current production and demand.
New plant, old problems
The integrated steel plant, with a production capacity of 13.2 million tonnes per annum (MTPA), will be supported by a 900-MW captive power plant that is proposed to be built by JSW Utkal Steel Limited. The Rs-65,000-crore project will require nearly 3,000 acre of common lands. The project will also have a 10 MTPA cement plant and captive jetties with a handling capacity of 52 MTPA.
The project is proposed to be built at the same site where a South Korean company, POCSO, was to build a steel plant. The memorandum of understanding between POCSO and the Odisha state government, signed in 2005, was greeted with stiff resistance from the locals. The conflict continued until 2016, leaving tens of civilians injured by the state’s security forces.
The movement pushed the National Green Tribunal to relook at the environmental clearance given to the project. In its order in 2016, the tribunal criticised the government for considering only four MTPA in its environmental impact assessment while the project’s capacity was 12 MTPA.
The latest proposal from JSW Utkal Steel Limited has mobilised them once again. Their previous experience with police – the face of state brutality – has left a scar on their collective ethos. Fearing the loss of common lands that would impact their livelihoods, the people of Dhinkia mobilised themselves once again. In January this year, the police resorted to lathi charges, injuring more than 100 people. They also barricaded their village in fear of further police violence.
Flawed environmental clearance
The ghosts of POSCO’s plant have come back to haunt Jindal’s steel plant. Much like POCSO’s environmental impact assessment (EIA), the Centre for Research on Energy and Clean Air analysis of the current project environmental impact assessment reveals its fraught nature.
The EIA compares the three-season average to daily PM10 levels, both of which have different upper limits. This skewed comparison attempts to portray the region’s air ambient quality as cleaner than in reality, allowing them to justify an increased pollution load. In addition, the EIA accounts neither for mercury and other heavy metals generated from its operation nor for the secondary particulate formation of SO2 and NOx.
Paradip, the district where the plant has been proposed, is already amongst the most polluted in the country, classified as ‘severely polluted’ under the Comprehensive Environmental Pollution Index as the particulate matter exceeds the prescribed limits. Emissions from the proposed steel plant will be on par with the entire region’s emission load.
For instance, while the total emission load for SO2 is 43,600kg per day for the entire industrial cluster (including 15 ‘Red’ category industries), the proposed plant alone is estimated to emit around 31,000 kg per day. The plant is expected to emit more than double the region’s current emission load for particulate matter.
Steel and climate change
This proposed plant is just one of India’s many in the pipeline to double its production capacity by the end of the decade. While the current total crude steel production capacity is 143.91 million tonnes, the National Steel Policy 2017 envisages production of 300 MT by 2030-2031. “It is expected that at the current rate of GDP growth, the steel demand will grow threefold in the next 15 years to reach a demand of 212-247 MT by 2030-31,” it reads. The policy arrived at this number assuming a GDP growth of 7.5%.
The policy justified the urgency of the ministry’s plans thus: “Going forward, the accelerated spend in the infrastructure sector, expansion of railways network, development of domestic shipbuilding industry, opening up of defence sector for private participation, anticipated growth in automobile and capital goods industry and the construction in urban & rural areas, are expected to create significant demand for steel in the country.”
As part of this push, the Union government, on October 20, 2021, announced a production-linked incentive with an outlay of Rs 6,322 crore to be released over the following five years.
The aggressive push for steel flies in the face of India’s carbon commitments and is also not required. In 2020-21, India produced only 96.20 million tonnes of finished steel, which is two-thirds of the country’s capacity. India’s steel consumption is much lower than it produces and nowhere near its production capacity. India’s finished steel consumption between 2016 and 2021 ranged from 83.7 MTPA to 94.1 MTPA, according to the latest annual report of the Steel Authority of India Ltd. Crude steel production ranged between 95.5 MTPA and 110.9 MTPA in the same period.
The energy intensity of the steel sector has shown little change globally. It is still highly reliant on coal – which meets 75% of its energy demand. India’s steel sector is notably worse. While the global average emissions are 1.1 tons of CO2 per tonne of crude steel, India emits two tons of carbon. Being a major economy, India’s unplanned aggressive push for new steel plants can be a setback in the world’s fight against climate change.
“Iron and steel production is the single largest emitter of greenhouse gas emissions contributing to 32% of the total manufacturing sector emissions in India. Driven by the National Steel Policy 2017, the sector is expected to have a three-fold increase in production capacity by 2030,” according to a report by the Council on Energy, Environment and Water.
Steel is considered crucial for India’s economic aspirations as a superpower. However, new steel plants could push the sector into financial disarray – much like the coal industry. Subsequent years of flattened power demand and cheap electricity from renewable sources have stranded assets to the tune of $60 billion. In 2018, a special parliamentary committee estimated that India has about 40 gigawatts of stressed and stranded thermal power assets.
Apart from financial costs, the push for steel profoundly impacts local communities and destroys ancient forests. The people of Dhinkia are still under siege by the police. Moreover, unregulated emissions from the proposed industry are not just a health risk to nearly 25,000 people but also a threat to the region’s vibrant agricultural economy.
The steel sector requires swathes of forests to be cleared for iron ore mining. The push for unnecessary steel, at the cost of these carbon sinks, also exposes India’s approach towards equitable growth, just transition and the earnestness of its efforts to reduce carbon emissions.
India’s steel consumption is projected to grow in the midterm, and the need to increase production capacity could become a necessity. First, however, the sector needs to move away from fossil fuels. Policymakers must consider cheaper, cleaner and future-proof ways to meet the country’s steel demand. Some of these include ramping up scrap steel recycling and investing in green hydrogen as a fuel source. These measures would also safeguard the country from volatile and fluctuating global coal and fossil gas prices.
Prafulla Samantara, who won the Goldman Environmental Prize in 2017, is a social justice activist based in Odisha. He led a 12-year legal battle against Vedanta Resources that proposed to clear 1,660 acres of forestlands to extract bauxite from the Niyamgiri Hills.