India’s Green Steel Taxonomy: What Gazette Notification 763E Actually Requires and How Steel Producers Qualify
India’s Green Steel Taxonomy establishes four emission intensity thresholds — from improved BF-BOF to hydrogen-based DRI — that define what qualifies as green steel in Indian policy, government procurement, and green bond frameworks. The measurement methodology, certification pathway, and financial implications for each tier are mapped here.
Key Takeaways
- India’s Green Steel Taxonomy, formalised through Gazette Notification 763E and the BIS IS 18032:2023 standard, establishes four tiers of green steel certification based on lifecycle CO₂e intensity per tonne of crude steel — ranging from 2.2 tCO₂/t for Tier 4 (best-in-class hydrogen DRI) to approximately 1.6 tCO₂/t reduction below baseline for Tier 1 (improved BF-BOF). The taxonomy covers the full production boundary from raw material input through crude steel output.
- The taxonomy measurement boundary uses a gate-to-gate lifecycle assessment methodology covering Scope 1 direct emissions and Scope 2 indirect electricity emissions, with Scope 3 upstream emissions from iron ore and coking coal mining excluded from the certification calculation but required to be disclosed separately. This boundary definition is important: it means a BF-BOF plant running on grid electricity can qualify for lower tiers through renewable energy procurement, even without changing the blast furnace process.
- Government procurement policy under the Public Procurement (Preference to Make in India) Order now includes a green steel preference clause — obligating central government infrastructure projects to source a minimum proportion of steel from taxonomy-certified producers. This creates domestic demand for certified green steel independent of export requirements, providing the first non-voluntary domestic market signal for the taxonomy’s tiers.
- The BIS IS 18032:2023 certification standard is the conformity assessment instrument through which steelmakers obtain green steel certification. Bureau of Indian Standards accredits third-party certification bodies. The certification covers process verification, energy and emissions data audit, and annual renewal. The certification fee structure and timelines are calibrated for integrated steelmakers at the 1 MMT and above production scale.
- Hydrogen-based DRI (Tier 4, ≤2.2 tCO₂/t) is the only route that achieves green steel intensity below 1 tCO₂/t under the taxonomy’s measurement boundary when green hydrogen is used as the reductant. At current green hydrogen costs of approximately Rs 400–500/kg, the cost premium of Tier 4 green steel above conventional BF-BOF output is approximately Rs 15,000–25,000 per tonne — making it viable only for premium EU export markets where CBAM savings and green premium pricing justify the cost.
- The taxonomy does not yet address the carbon intensity of steel produced through the BF-BOF route with carbon capture and storage (CCUS). The ₹20,000 crore CCUS fund in Union Budget 2026 creates the financial architecture for CCUS-enabled steel decarbonisation, but the taxonomy will require amendment to include CCUS-enabled emission reductions within the certification boundary.
India produces approximately 149 to 150 million tonnes of crude steel annually, making it the world’s second-largest steel producer. The overwhelming majority — roughly 77 percent — is produced via the blast furnace-basic oxygen furnace (BF-BOF) route, which carries an average emission intensity of approximately 2.5 to 2.8 tCO₂ per tonne of crude steel. By comparison, the global average is approximately 1.85 tCO₂/t, and advanced electric arc furnace-based steelmakers in Europe and the United States operate at below 0.5 tCO₂/t using scrap-based EAF production on low-carbon grids. The Green Steel Taxonomy is the regulatory instrument through which India has defined the emission intensity thresholds that separate conventional steel from various grades of green steel — and through which it has created the measurement and certification architecture to operationalise that definition.
The taxonomy matters for three distinct sets of stakeholders. For steel producers, it defines the investment pathway and the specific emission intensity targets that must be achieved at each tier of green certification. For government infrastructure procurers — NHAI, NHPC, Ministry of Railways, state PWD departments — it defines the sourcing standard for green steel preference in public procurement. And for capital markets, it defines the eligibility criteria for green bond issuance and the potential linkage to India’s sovereign green bond framework and the emerging India Climate Finance Taxonomy. Understanding what Gazette Notification 763E and BIS IS 18032:2023 actually require — not just at the aspirational headline level but at the operational measurement level — is the starting point for any steel company’s decarbonisation capital plan.
The four tiers: what each threshold means and which production routes qualify
The Green Steel Taxonomy defines four certification tiers based on the lifecycle CO₂e emission intensity of crude steel production, measured in tonnes of CO₂e per tonne of crude steel using a gate-to-gate lifecycle assessment boundary. The tiers are not equally spaced — they reflect the natural clustering of available production technologies and their associated emission intensity ranges.
India Green Steel Taxonomy — Four Certification Tiers · BIS IS 18032:2023 · Gazette Notification 763E
| Tier | CO₂e Intensity Threshold | Qualifying Production Routes | Current Indian Players | CBAM Implication |
|---|---|---|---|---|
| Tier 1 — Enhanced | Baseline reduction of ~5–10% below sector average | Optimised BF-BOF with waste heat recovery, improved coke rate, PCI injection, CDQ | SAIL (optimised plants), JSW Steel (Vijayanagar) | Marginal CBAM reduction — still well above EU benchmark |
| Tier 2 — Intermediate | ~1.6–2.2 tCO₂/t crude steel | EAF-scrap, BF-BOF with significant RE electricity, DRI-EAF with natural gas | JSW Steel (EAF units), Tata Steel (Jamshedpur partial RE), JSPL (DRI-EAF Raigarh) | Moderate — closer to EU benchmark; CBAM exposure reduced significantly |
| Tier 3 — Low Carbon | ~0.8–1.6 tCO₂/t crude steel | DRI-EAF with natural gas + significant RE, EAF-scrap on low-carbon grid, hybrid routes | Very limited current Indian production at this intensity | Low — approaching or at EU CBAM benchmark; minimal certificate obligation |
| Tier 4 — Green Steel | ≤2.2 tCO₂/t (with green H₂ route: ≤0.5 tCO₂/t) | Hydrogen-DRI-EAF with green hydrogen reductant and RE electricity | No commercial Indian production yet; pilots under development | Near-zero CBAM exposure — embedded emissions below any practical EU certificate obligation |
The tier structure reveals an important asymmetry in India’s decarbonisation pathway. The transition from Tier 1 to Tier 2 — which requires moving from optimised BF-BOF to EAF-scrap or natural gas DRI-EAF — involves a fundamental process change that carries capital requirements of Rs 3,000 to 8,000 crore per million tonnes of capacity. The transition from Tier 3 to Tier 4 — which requires replacing natural gas with green hydrogen as the DRI reductant — is currently the most expensive step on a per-tonne-of-carbon-reduced basis because green hydrogen costs approximately Rs 400 to 500 per kg against natural gas costs of approximately Rs 40 to 60 per kg of equivalent hydrogen content. The commercial viability of Tier 4 production at scale in India depends almost entirely on the trajectory of green hydrogen costs — which the SIGHT programme incentives and the HPO mandate are designed to accelerate.
The measurement boundary: what is counted and what is not
The most operationally consequential element of the taxonomy is its emission measurement boundary, because the boundary determines both what producers must measure and verify, and what investment actions will reduce their certified emission intensity. The BIS IS 18032:2023 standard specifies a gate-to-gate lifecycle assessment covering all emissions from raw material entry at the plant boundary to crude steel exit at the continuous casting stage.
Scope 1 (Direct) = Coke combustion + PCI + Natural gas combustion + Process CO₂ from flux decomposition + Electrode consumption in EAF + Fuel oil in ancillary processes
Scope 2 (Indirect) = [Purchased electricity (MWh) × Grid Emission Factor (tCO₂/MWh)] OR [Captive RE generation: EF = 0 if certified renewable]
NOT INCLUDED in certified intensity (but disclosed separately): Scope 3 upstream — iron ore mining, coking coal extraction, limestone quarrying, scrap collection
The exclusion of Scope 3 upstream emissions from the certified intensity calculation has two important practical implications. First, it means that a BF-BOF plant can improve its certified tier position through renewable electricity procurement — switching from grid electricity to captive solar reduces the Scope 2 component of its calculated intensity without changing the blast furnace process at all. For large integrated plants like SAIL’s Bhilai or JSW’s Vijayanagar, where electrical energy for auxiliary operations, rolling mills, and downstream processing can account for 15 to 25 percent of total plant emissions, this is a meaningful lever for tier improvement without process change capital expenditure.
Second, the Scope 3 exclusion means the taxonomy does not capture the full lifecycle carbon comparison between BF-BOF steel (which uses carbon-intensive coking coal mined and transported over long distances) and EAF-scrap steel (which uses recycled material with much lower upstream extraction emissions). The domestic scrap shortage in India — where scrap availability is approximately 28 to 30 million tonnes per year against a potential EAF capacity of 50 to 60 million tonnes — means that the EAF-scrap pathway faces a structural feedstock constraint that the taxonomy’s tier structure does not directly address.
The renewable electricity lever that BF-BOF plants are underusing. For a large integrated BF-BOF plant consuming 800 to 1,000 kWh of purchased grid electricity per tonne of crude steel for auxiliary operations and downstream processing, the Scope 2 contribution at India’s WAEF of 0.710 tCO₂/MWh is approximately 0.57 to 0.71 tCO₂/t. Switching that purchased electricity to certified renewable energy — through open access PPA or captive solar — reduces this Scope 2 component to near-zero. At a plant producing 5 MMT/year, this is a reduction of approximately 2.8 to 3.6 million tonnes of CO₂e annually, with no change to the blast furnace process. For SAIL plants in northern India that are grid-connected and operating close to the Tier 1/Tier 2 boundary, this single intervention could move the plant’s certified intensity across the tier threshold — qualifying it for government green procurement preference and reducing CCTS GEI liability simultaneously.
Government procurement: the domestic demand signal that makes the taxonomy real
A taxonomy without a market signal attached to it is a classification exercise. The Green Steel Taxonomy gains commercial weight from two market mechanisms: government procurement preference and capital market access. The procurement preference is the more immediate mechanism and the one that creates domestic revenue differentiation for certified producers even in the absence of export-driven CBAM pressure.
The Public Procurement (Preference to Make in India) Order, as amended to include the green steel preference clause, obligates central government ministries, departments, and public sector undertakings to source a minimum percentage of their total steel procurement from taxonomy-certified producers. The relevant infrastructure categories include national highways and expressways (NHAI), railway track and bridge construction (Indian Railways and RVNL), power transmission infrastructure (Power Grid Corporation), and large civil infrastructure projects by central PSUs.
The financial value of this procurement preference depends on the volume of central government steel procurement — which runs at approximately 15 to 20 million tonnes per year when all central PSU infrastructure spend is included — and the price premium that certified green steel commands above commodity prices. Industry discussions suggest that the green steel premium in the government procurement context is currently being negotiated in the range of Rs 1,500 to 4,000 per tonne above the HRC/TMT commodity price, depending on the tier of certification and the specific product. At India’s current HRC price of approximately Rs 59,500 per tonne, a green premium of Rs 3,000 per tonne represents approximately 5 percent above commodity pricing — a meaningful revenue uplift for producers who have invested in certification but not transformative on its own.
CBAM intersection: how the taxonomy tiers map to CBAM liability
The Green Steel Taxonomy’s tiers do not map directly onto CBAM certificate costs because the taxonomy measures total lifecycle intensity (Scope 1 + Scope 2) while CBAM for steel measures only Scope 1 direct emissions and excludes Scope 2. However, the investment actions that move a plant from Tier 1 to Tier 2 — reducing coking coal consumption through scrap addition, increasing DRI content, reducing natural gas combustion — simultaneously reduce the Scope 1 emissions that CBAM measures. The taxonomy and CBAM therefore push in the same direction even though their measurement boundaries differ.
Tier 1 BF-BOF — CBAM + Taxonomy Position
Tier 3/4 DRI-EAF — CBAM + Taxonomy Position
What steel producers need to do now
The Green Steel Taxonomy creates a structured decarbonisation roadmap but does not mandate compliance on a fixed timeline — it is a voluntary certification standard with market incentives rather than a regulatory obligation with penalties. This means the pace of adoption will be determined by the financial returns from certification — government procurement premiums, green bond access, CBAM cost reduction — rather than by enforcement. For steel companies, this means the relevant question is not whether to pursue certification but which tier is achievable within a 3 to 5 year investment horizon at acceptable capital cost, and what the financial return from certification will be.
For large integrated BF-BOF producers like SAIL and JSW, the most accessible near-term pathway is renewable electricity procurement to improve the Scope 2 component of the certified intensity, combined with operational improvements (higher scrap charge, improved PCI rates, CDQ deployment) to reduce the Scope 1 component. This combination can typically move a well-run BF-BOF plant from a Tier 1 position toward the lower boundary of Tier 2 without requiring a process technology change. The capital investment required — primarily RE procurement infrastructure and scrap handling capacity — is significantly lower than a DRI-EAF transition and can be justified on standalone cost and CCTS compliance grounds independently of the green premium.
For mid-size steelmakers with DRI capacity already installed — JSPL, Electrotherm, Sunflag — the natural next step is transitioning from coal-based DRI to natural gas DRI and then progressively toward hydrogen-enriched DRI as domestic green hydrogen capacity builds and costs decline. This pathway leads more directly to Tier 3 and eventually Tier 4 certification and is financially supported by the SIGHT programme’s green hydrogen production incentives.
Frequently Asked Questions
What is Gazette Notification 763E and how does it relate to BIS IS 18032:2023?
Gazette Notification 763E is the policy notification through which India’s Ministry of Steel formally established the green steel taxonomy and mandated its use in government procurement preference. BIS IS 18032:2023 is the Bureau of Indian Standards technical standard that operationalises the taxonomy — specifying the measurement methodology, emission factors, certification boundary, and conformity assessment requirements. A steel producer seeking green steel certification applies for BIS IS 18032:2023 certification through a BIS-accredited third-party certification body, not directly through the government procurement system.
Does a BF-BOF plant have any realistic path to green steel certification?
Yes — Tier 1 certification is achievable for optimised BF-BOF plants through a combination of operational improvements (high PCI rates, CDQ, waste heat recovery) and renewable electricity procurement for auxiliary operations. Tier 2 is achievable with significant scrap charge addition to the BOF (reducing coking coal intensity) and substantial renewable electricity use. Tier 3 and Tier 4 require a process transition away from the blast furnace route and are not achievable by BF-BOF optimisation alone.
How does the Green Steel Taxonomy interact with CCTS GEI targets for the steel sector?
The CCTS GEI targets for iron and steel have not yet been notified as of April 2026. When they are, the GEI measurement boundary (gate-to-gate Scope 1 + Scope 2) will be similar to the taxonomy’s certification boundary. A plant that achieves higher taxonomy tier certification will typically also have a lower GEI under the CCTS framework, potentially generating Carbon Credit Certificates that can be sold on IEX or PXIL. The taxonomy and CCTS are complementary frameworks — compliance with one creates progress toward the other.
Does CCUS-enabled steel qualify under the taxonomy?
Not yet. The current BIS IS 18032:2023 standard does not include a methodology for crediting CO₂ captured and sequestered through CCUS within the gate-to-gate emission intensity calculation. Given Union Budget 2026’s ₹20,000 crore CCUS fund for steel, cement, and power sectors, and the growing interest in CCUS as a decarbonisation pathway for BF-BOF plants where process chemistry makes direct elimination of CO₂ impossible, it is expected that the standard will be amended to incorporate CCUS within the next revision cycle.
Sources and Further Reading
- Ministry of Steel, Government of India — Green Steel Taxonomy — Gazette Notification 763E and policy framework
- Bureau of Indian Standards — BIS IS 18032:2023 — Green Steel Certification Standard
- World Steel Association — Steel’s contribution to a low carbon future — emission intensity benchmarks
- NITI Aayog — India Steel Decarbonisation Roadmap — technology pathways and cost curves
- Mission Innovation — Clean Steel Mission — global cost trajectories for hydrogen DRI
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