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Umashankar Sreenivasamurthy

GHG Emission Regulations for the Indian Iron and Steel Sector

Umashankar Sreenivasamurthy

GHG Emission Regulations for the Indian Iron and Steel Sector

 

Recent international concerns over unchecked Greenhouse Gas (GHG) emission increase in emerging economies (EE) has led to demands for effective controls post 2012, even while EE governments rule out national targets. A closer look at the emissions profile in these countries reveals that power and industrial sectors are major GHG contributors, where old and less efficient technologies and processes add to the problem. With high economic growth entailing new capacity additions, allowing endogenous production paths without taking into account externality effects like GHG emissions would only serious lead to lock-in effects and tougher bargaining positions for governments and firms in future.

With this context, the study examines introduction of suitable policy based sectoral approach as a solution to address the issue of GHG emissions in EEs whilst not affecting fundamental growth drivers. The fast growing Iron and Steel sector of India is taken as a backdrop for analysing policy implications. Detailed barrier analyses of the sector show that Energy Efficiency is generally not a top corporate agenda and awareness of CO2 liability is almost missing. This is further reinforced by government’s laissez faire approach in the country. Overall, these circumstances confirm a lack of serious attitude in the sector as the major hurdle for achieving cleaner production paths.

A number of policy options are discussed in depth to evaluate how they can help in creating the necessary behavioural shifts. On soliciting views from few stakeholders (firms) on such radical approaches, it was heartening to find out that, prima facie, both large and small firms are ‘not strictly averse’ to the idea of carbon emission liability costs in future. Further, since each policy has its own characteristics, benefits and shortcomings, it is recommended that a comprehensive stakeholder education with high participation be undertaken to help them make an informed decision. The study illustrates that adopting such type of policies would not only help create the much needed stimulus for transformation of the sector, but also make EEs more inclusive under future international climate negotiations.