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Steel · DecarbonisationIndia’s Blast Furnace Fleet: The Emissions Profile, the Relining Decision Window, and What BF-BOF Operators Can Actually Do Under CCTS and CBAM
India’s blast furnace fleet is simultaneously the country’s most productive steelmaking asset and its single largest industrial decarbonisation problem. Approximately 65% of India’s crude steel output flows from the BF-BOF route, at an average emission intensity of around 2.2 to 2.6 tCO₂e per tonne of crude steel — roughly 54% above the EU CBAM benchmark and more than twice the intensity of scrap-based electric arc furnace production. More than 43 Mtpa of BF capacity is due for relining before 2030. Each relining decision — costing $200 to $300 million and extending furnace life by 15 to 20 years — locks the asset into coal-based production through to the 2040s or beyond. This article maps exactly what a BF-BOF operator can do within the furnace technology to reduce GEI under the CCTS, how those levers interact with CBAM cost exposure, and what the relining decision means for stranded asset risk in the context of India’s 2070 net-zero commitment.
India’s operating BF-BOF capacity is approximately 87 Mtpa, with the route accounting for 65% of crude steel production. The sector’s average GEI — approximately 2.36 tCO₂e per tonne under the CCTS FY 2023-24 baseline — sits well above the world average of 2.32 tCO₂/t and substantially above China’s 1.84 tCO₂/t. The EU CBAM benchmark for steel is approximately 1.55 tCO₂/t for the most efficient EU producers, placing India’s BF-BOF fleet at a ~52% premium before a single certificate is purchased.
The CCTS iron and steel targets require a GEI reduction from a sector average of 2.36 to approximately 2.23 tCO₂/t by FY 2026-27 — roughly a 5.5% cut over two compliance years. CEEW analysis confirms that most of this reduction lies in the negative-cost zone of the marginal abatement cost curve: it can be achieved through energy efficiency improvements that save more than they cost, without requiring new technology investments or production route changes. This is the compliance picture for the first two years. Beyond ~23 MtCO₂e, deeper cuts require genuinely capital-intensive interventions.
BF-BOF operators have a defined toolkit of within-technology abatement levers that can collectively reduce GEI by 8 to 15% without changing the production route. The most valuable in the near term, ranked by abatement per rupee of investment, are: coke rate reduction through burden optimisation and coal blend improvement; pulverised coal injection to substitute expensive metallurgical coke with cheaper coal; top pressure recovery turbines for blast furnace top-gas energy recovery; coke dry quenching for waste heat capture from coke ovens; and renewable electricity for Scope 2 intensity reduction under the CCTS gate-to-gate boundary.
The relining decision is the most consequential capital allocation choice a BF operator will make under CCTS and CBAM. A reline costing $200 to $300 million extends furnace life by 15 to 20 years and locks the asset into coal-based production until the early 2040s. At that point, India’s CCTS targets will have tightened significantly beyond current levels, and CBAM’s embedded emissions will likely include Scope 2 electricity in addition to current Scope 1-only coverage for steel. GEM estimates $124 to $187 billion in stranded asset risk from India’s BF-BOF capacity in development alone, not including operating fleet. For investors and boards, relining without a parallel decarbonisation roadmap is no longer a straightforward decision.
India is responsible for 57% of global coal-based BOF capacity under development — approximately 73 Mtpa of new BF-BOF capacity planned to begin operations by 2030. This expansion is driven by genuine and legitimate domestic demand growth: India’s steel consumption per capita remains far below developed economy levels, and the infrastructure required by Viksit Bharat 2047 will require very large volumes of domestically produced steel. The policy challenge is not to stop this expansion but to ensure that the new capacity being built now does not repeat the lock-in errors of the last two decades at an even larger scale.
India’s BF-BOF fleet — what it produces, what it emits, and who operates it
India produced approximately 149 million tonnes of crude steel in 2024, making it the world’s second-largest steel producer after China. The BF-BOF route — where iron ore is reduced to liquid iron in a coal-fired blast furnace and then refined into steel in a basic oxygen furnace — accounts for approximately 65% of this output by production share, with a capacity share of around 59%. The remainder comes from electric arc furnaces (approximately 30%) and induction furnaces (approximately 9%), with DRI as a key feedstock for the electric route.
The major BF-BOF operators in India are:
RINL (Rashtriya Ispat Nigam Limited, operating the Vizag Steel plant at 7.3 Mtpa), JSPL (9.6 Mtpa, with a mix of BF and DRI-EAF at Angul), and a growing cohort of smaller integrated BF-BOF units round out the fleet. The CCTS covers 253 iron and steel units under the notified GEI Target Rules, ranging from plants producing 90,000 tonnes per year to the largest at approximately 12 million tonnes.
The emissions intensity gap — where India’s BF-BOF stands versus the world
The starting point for any decarbonisation analysis is the emission intensity benchmark, because it determines both the CCTS compliance position and the CBAM certificate cost for any plant exporting to the EU. The numbers are not flattering for most of India’s integrated fleet.
The chart illustrates a structural problem: even the sector average for India’s BF-BOF fleet sits at the high end of the global BF-BOF distribution, and the worst quartile of the fleet — older, smaller blast furnaces operating at lower productivity and higher coke rates — is substantially more intensive than this average. Against the EU CBAM benchmark of approximately 1.55 tCO₂/t, which is used to calculate the certificate cost for EU importers of Indian steel, the average Indian BF-BOF producer carries a CBAM liability of approximately 0.81 tCO₂/t above the benchmark — or at €80 per tCO₂e in EU ETS pricing, approximately €65 per tonne of steel exported to the EU in certificate costs before the benchmark deduction is applied.
The gap reflects a combination of factors. Indian blast furnaces have historically operated with higher coke rates per tonne of hot metal than world best practice — partly because of iron ore quality characteristics (Indian iron ore contains more fines and gangue, requiring more energy to reduce), partly because of older furnace design, and partly because energy costs in India were historically low enough that coke efficiency was not a major commercial priority. CCTS and CBAM have simultaneously changed the financial incentive structure: coke efficiency is now directly linked to both the compliance position under the domestic carbon market and the export cost into the largest premium destination market.
The relining decision — and why it matters more than any other capital choice in steel
A blast furnace is not a single asset that can be continuously operated and upgraded incrementally. It has a definitive operating campaign life — typically 15 to 25 years between major relinings — at the end of which the refractory lining (the heat-resistant brick that protects the steel shell from temperatures exceeding 1,500°C) must be completely replaced. Relining requires a full furnace shutdown of 60 to 120 days, the complete demolition and replacement of the furnace interior, and for larger modern furnaces, potentially the replacement of ancillary equipment including hot stoves, blowers, and gas cleaning systems.
The cost is substantial. A standard BF relining runs $200 to $300 million. For the largest, most modern furnaces — such as the 4,000 m³ class operated by JSW Steel at Vijayanagar — relinings can approach $500 million to $1 billion when associated infrastructure upgrades are included. This is not capital that gets written off in a few years: it represents an operating life extension of 15 to 20 years, carrying an implicit commitment to coal-based ironmaking through to the 2040s at minimum.
When a blast furnace reaches the end of its campaign and a relining decision arrives, the board of an Indian integrated steel producer faces a choice that is simultaneously a capital allocation decision, a carbon risk decision, and a market strategy decision. Option A — full relining: Rs 2,000 to 2,500+ crore ($300–500M equivalent) for a major integrated BF; extends life 15–20 years; locks in coal-based production until 2040–2045; captures no carbon benefit from the investment; increasing CCTS and CBAM cost trajectory baked into the asset’s future economics. Option B — partial relining / campaign extension: Lower upfront cost; buys 3–7 years of additional operating time; does not resolve the structural decision but defers it — potentially to a more expensive regulatory environment with less transition support available. Option C — transition to DRI-EAF in parallel: Does not eliminate the existing BF’s remaining life but avoids new coal lock-in; new DRI-EAF capacity serves the same steel demand at lower carbon cost; the old BF can be retired at natural end-of-life. Capital requirement for equivalent DRI-EAF capacity: approximately $200–400 million per million tonnes — comparable to a BF reline for many scales of plant. The CCTS and CBAM financial signals, taken together, are beginning to make Option C look materially more attractive on a risk-adjusted basis than it did five years ago.
More than 43 Mtpa of India’s operating BF capacity is estimated to be due for relining before 2030, according to GEM analysis. For each furnace in this cohort, the relining window is simultaneously the clearest opportunity the sector has to break the coal-based production cycle — and, if the relining goes ahead without a parallel transition plan, the moment at which the carbon lock-in is renewed for another 20 years. With India’s CCTS targets expected to tighten significantly beyond the current first-phase levels, and CBAM’s trajectory moving toward including Scope 2 electricity emissions for steel in later implementation rounds, every BF relining without a decarbonisation roadmap today is a more expensive problem in 2040.
What BF-BOF operators can actually do — the abatement toolkit
The key analytical question for a CCTS-obligated BF-BOF plant is not whether the plant must eventually decarbonise — it must — but what within-technology measures are available now to reduce GEI without replacing the furnace or the production route. The answer is: a meaningful but bounded set of interventions that can collectively reduce BF-BOF emission intensity by 8 to 15% relative to baseline, at costs that range from negative (measures that pay for themselves) to capital-intensive but financially justified.
| Abatement lever | GEI reduction potential | Investment cost | Payback | CCTS relevance |
|---|---|---|---|---|
| Coke rate reduction via burden optimisation Improving sinter/pellet ratio; increasing pellet share; better raw material mix | 2–4% GEI reduction | Low to zero | Immediate; saves coke cost | Scope 1 direct — reduces CO₂ per tonne of hot metal |
| Pulverised coal injection (PCI) rate increase Injecting fine coal through tuyeres to substitute expensive metallurgical coke | 2–5% GEI reduction per 10 kg/t increase in PCI rate | Low–moderate | 2–4 years (coal is cheaper than coke) | Scope 1 direct — coke replacement reduces process CO₂ |
| Top pressure recovery turbines (TRT) Converting blast furnace top-gas pressure to electricity before gas cleaning | 0.5–1.5% GEI reduction (indirect) | Moderate | 4–8 years (generates power revenue) | Scope 2 indirect — reduces net electricity purchased from grid |
| Coke dry quenching (CDQ) Replacing wet coke quenching with nitrogen gas cooling; waste heat to steam/power | 1–2% GEI reduction | Moderate–high | 5–10 years | Scope 1 + Scope 2 — reduces energy intensity of coke production and grid power need |
| Hot stove waste heat recovery Recovering preheated air from BF hot stoves for use in adjacent processes | 0.5–1.5% GEI reduction | Low | 2–5 years | Scope 1 indirect — reduces fuel consumption in blast heating |
| Sintering efficiency improvement Improving sinter plant energy consumption; reducing sinter return fines; burn-through point control | 1–2% GEI reduction | Low–moderate | 3–6 years | Scope 1 direct — sintering is a major CO₂ contributor within BF-BOF |
| Renewable electricity for grid power substitution Green open access solar or wind PPA to replace grid power consumed in auxiliary systems | 1–4% GEI reduction depending on grid power share of total energy | Moderate (PPA capex or open access fees) | Immediate improvement in CCTS Scope 2 position | Scope 2 direct — reduces grid electricity × GEF component of GEI |
| BOF gas recovery and use Recovering converter off-gas for fuel use in rolling mills or power generation instead of flaring | 0.5–1% GEI reduction | Low | 2–4 years | Scope 1 — recovered gas replaces purchased fuel; avoids flare emissions |
| Coal blend and coke quality optimisation Optimising blend of hard and semi-hard coking coal to improve coke strength; reduces coke rate | 1–3% GEI reduction | Operational cost change | Variable — depends on coal price differentials | Scope 1 — improved coke quality reduces coke consumption per tonne of hot metal |
Applied together across an integrated plant, this toolkit can reduce BF-BOF GEI by 8 to 15% over a 3 to 5 year investment programme. At the sector average of 2.36 tCO₂/t, a 10% reduction delivers approximately 0.24 tCO₂/t improvement — bringing a plant to roughly 2.12 tCO₂/t. This is sufficient to meet the CCTS first-phase targets for most units, and in many cases to generate surplus CCCs that can be banked or sold. It does not close the gap to the CBAM benchmark of 1.55 tCO₂/t — which would require a 35% reduction from sector average — but it meaningfully reduces the per-tonne CBAM certificate cost and demonstrates the kind of continuous improvement trajectory that investors, lenders, and EU importers increasingly require.
CEEW analysis confirms that the iron and steel sector’s CCTS first-phase targets — requiring GEI to fall from 2.36 to approximately 2.23 tCO₂/t — sit almost entirely in the negative-cost zone of the marginal abatement cost curve. This means the required reductions pay for themselves in saved energy costs. The sector has an abatement potential of up to 45 MtCO₂e at low or negative marginal cost — far exceeding the approximately 23 MtCO₂e avoidance required by the first-phase targets. Plants that are not meeting their CCTS targets in FY 2025-26 are, in most cases, not implementing cost-effective energy efficiency measures that would save them money even without a carbon market — which makes non-compliance both financially and operationally puzzling.
The outer limits of within-technology abatement
The abatement toolkit described above has a ceiling. Once best practice energy efficiency is achieved — coke rates around 400 to 420 kg per tonne of hot metal, full waste heat recovery, optimised burden, maximum PCI rates — further reductions within the BF-BOF route require either technology that does not yet exist at commercial scale (top gas recycling with CO₂ capture, hydrogen injection as a reducing agent supplement) or the injection of biomass-based reducing agents that face their own sustainability questions and supply constraints.
The fundamental constraint is chemistry. A blast furnace reduces iron ore by reacting it with carbon — coke or other carbon-based reducing agents — to strip the oxygen from iron oxide and produce molten iron. This reaction produces CO₂ as an irreducible by-product. Even a perfectly efficient blast furnace operating at global best practice energy intensity produces around 1.5 to 1.8 tCO₂ per tonne of hot metal from this chemistry alone. Add the Scope 2 electricity consumed in auxiliary systems and the processing of sinter and coke, and the irreducible floor for BF-BOF under standard operations is approximately 2.0 to 2.2 tCO₂/t crude steel — a range that still sits above the CBAM benchmark and will still carry a certificate cost in the EU export market, however efficient the plant becomes.
This chemistry ceiling is why Global Energy Monitor’s assessment states plainly that coal-based blast furnaces cannot achieve zero or near-zero emissions even with retrofits, and why the IEA’s roadmap for net-zero steel requires a fundamental shift to DRI-EAF (gas-based or hydrogen-based) and scrap-EAF as the dominant production routes by 2050. The BF-BOF toolkit buys time — valuable, commercially important time — but it does not provide the production route that India’s 2070 net-zero commitment ultimately requires.
India imports approximately 55 to 60 million tonnes of coking coal per year, with Australia supplying around 60% and the remainder from the United States, Canada, Mozambique and Russia. The coal blend used in coke ovens determines coke strength (as measured by CSR — Coke Strength after Reaction — and CRI — Coke Reactivity Index), which in turn determines the coke rate in the blast furnace and hence the CO₂ per tonne of iron. Premium hard coking coal from Australia’s Bowen Basin produces the highest quality coke and lowest coke rates. Semi-hard and semi-soft coking coals produce lower quality coke, requiring higher rates per tonne of hot metal and therefore higher Scope 1 emissions intensity. The West Asia war has not directly affected coking coal supply routes, which originate primarily from the Pacific Basin. However, the war’s disruption of seaborne shipping insurance and logistics indirectly affects freight costs for all dry bulk importers — and any further geopolitical escalation along Indian Ocean trade routes would add supply chain risk to coking coal procurement alongside the direct energy exposure that Indian steel’s electricity and fuel inputs already carry.
The new capacity question — what India is building and at what carbon cost
The most consequential dimension of India’s blast furnace story is not the operating fleet — it is the 258 Mtpa of steel capacity currently in various stages of development, of which 69% is planned as BF-BOF and only 13% as EAF. India accounts for 40% of all developing global steelmaking capacity and 57% of global coal-based BOF capacity under development. These are not idle numbers. They represent investment decisions being made today that will determine the emission intensity of India’s steel sector not just in 2030 but through to 2045 and beyond.
India has 73 Mtpa of BOF-based capacity in the planning and construction pipeline that is set to start operations by 2030. If this capacity is built and operated as intended, and if CCTS targets tighten to 1.8 to 2.0 tCO₂/t by 2035 (a plausible trajectory given the 2035 NDC and India’s 2070 net-zero commitment), the new BF-BOF capacity will be facing material compliance shortfalls within 10 to 15 years of its commissioning — creating precisely the stranded asset risk that GEM estimates at $124 to $187 billion. The National Steel Policy focuses on capacity expansion and identifies decarbonisation as a parallel objective, but does not specify a technology requirement that would prevent new BF-BOF capacity from being commissioned. The green steel taxonomy (3-star to 5-star) creates a labelling and procurement signal, but does not currently prohibit new coal-based primary capacity from entering the market.
The counterargument — and it is a legitimate one — is that India’s per-capita steel consumption of approximately 90 kg per year is a fraction of China’s 650 kg or the global developed-economy average of 200 to 250 kg. The steel needed for India’s housing, infrastructure, railways, and industrial growth over the next 20 years is not in dispute. The policy question is whether new primary steel capacity built to serve that demand over the next 5 years needs to be BF-BOF, or whether the combination of CCTS, CBAM, declining DRI-EAF capital costs, and India’s growing green hydrogen ambition can shift the investment calculus toward lower-carbon primary production routes for at least a meaningful portion of the new capacity.
Frequently Asked Questions
What is the CCTS GEI target for Indian integrated steel plants?
The iron and steel CCTS targets were notified in the second tranche of GEI Target Rules (June 2025, final October 2025), covering 253 units. Targets are set plant-by-plant based on each unit’s FY 2023-24 baseline intensity, with a benchmarking approach where plants with higher baselines are assigned more ambitious reduction targets. The sector average baseline is approximately 2.36 tCO₂e per tonne of crude steel, with targets requiring a reduction to approximately 2.23 tCO₂e/t by FY 2026-27. ArcelorMittal Nippon Steel’s Hazira plant (baseline 2.2701) must reach 2.1696 tCO₂e/t by FY 2026-27 — a reduction of 4.4% over two years. Plants starting from a higher baseline face steeper reductions in absolute terms.
Can a blast furnace ever meet the EU CBAM benchmark?
Through within-technology optimisation alone — higher PCI, lower coke rates, full waste heat recovery, burden optimisation — a world-class Indian blast furnace can reach approximately 2.0 to 2.2 tCO₂/t crude steel. This is still significantly above the EU CBAM benchmark of approximately 1.55 tCO₂/t, which reflects the performance of the most efficient EU producers (primarily EAF-based or advanced BF-BOF with substantial scrap use and renewable electricity). Reaching the CBAM benchmark from a BF-BOF production base requires a production route change, not just within-technology improvement. The CBAM certificate cost for an Indian BF-BOF operator exporting to the EU will therefore always reflect some positive gap above the benchmark, with the gap shrinking as BF efficiency improves but never reaching zero under the current coal-based route.
Why is India’s BF-BOF emission intensity higher than China’s?
Several factors contribute. Indian iron ore, particularly from Odisha and Jharkhand, contains higher alumina content and more fines than Chinese ore, requiring more energy in sintering and reduction. Many Indian blast furnaces operate at lower coke rates per unit of hot metal than Chinese world-class units, partly due to older technology in the SAIL fleet and partly due to historically lower fuel cost pressure. The coal blend used in Indian coke ovens has historically included a higher share of imported semi-hard and semi-soft coking coal relative to premium hard coking coal, producing lower-quality coke that drives higher consumption rates. Chinese steel producers have also invested heavily in supercritical and ultra-supercritical power generation technology for captive power, improving efficiency. India’s average grid emission factor (0.710 tCO₂/MWh) is also higher than China’s in many regions, adding Scope 2 intensity to the comparison.
What does a BF relining involve, and how long does it take?
A blast furnace relining requires a complete shutdown of the furnace, during which the refractory lining — the heat-resistant brick that protects the steel shell from molten iron at 1,500°C — is entirely demolished and replaced from the hearth up. The shutdown typically lasts 60 to 90 days for a standard reline and 90 to 120 days for a major reline that includes upgrades to hot stoves, blowers, and other ancillaries. Modern techniques like the NSENGI Single Block Method — used at JSW Steel’s Dolvi plant in 2016 — can reduce the most critical phase to as little as 4 days of pull-in and pull-out, compared to 15 days for conventional block relining methods. The capital cost for a reline of an Indian integrated plant in the 2–4 Mtpa range is approximately Rs 1,500 to 2,500 crore ($180–300 million), with the largest units exceeding this range.
Does improving BF efficiency reduce CBAM costs as well as CCTS compliance costs?
Yes — and the CBAM benefit is currently larger than the CCTS benefit per tonne of CO₂e reduced, simply because CBAM certificate prices (around €80/tCO₂e at current EU ETS pricing, equivalent to approximately Rs 7,200/tCO₂e) are far higher than expected early CCTS prices (Rs 300–900/tCO₂e based on early market estimates). Every tonne of CO₂e by which a steel plant reduces its BF-BOF emission intensity below its baseline delivers approximately Rs 7,200 in avoided CBAM certificate cost (for exports to the EU) against approximately Rs 300–900 in CCTS market value. This asymmetry means that for steel exporters, the CBAM case for BF efficiency investment is significantly stronger than the CCTS case alone — reinforcing the same investment decision from two directions simultaneously.