India’s Best Iron and Steel Company Gets Average score; Sector is Rated Poor

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The Minister of State (Independent Charge) for Environment and Forests, Smt. Jayanthi Natarajan presenting the Centre For Science Green Rating Project Awards 3 Leaves to Ispat Industries Limited, Raigad, Maharashtra, at a function, in New Delhi on June 04, 2012.

NEW DELHI:  The iron and steel industry in India is struggling to meet environmental norms. While some plants and companies are making efforts to clean up their acts, the sector’s overall environmental performance is poor. It is using up enormous quantities of resources (land, water, energy, raw materials), polluting and not complying with even the weak environmental norms that exist today, and getting away doing all this because of our lax regulatory and monitoring capabilities.

This assessment of the iron and steel sector in India has emerged from a unique rating of the industry done by Centre for Science and Environment’s Green Rating Project (GRP). The ratings were released here on June 4, 2012 by Montek Singh Ahluwalia, deputy chairperson, Planning Commission and Jayanthi Natarajan, Union minister of state for environment and forests (independent charge).

This core sector has a long way to go in meeting environmental norms, finds CSE green rating survey released on eve of World Environment Day

1. 21 top steelmakers rated by CSE’s Green Rating Project. Sector receives low marks for its overall environmental compliance, compared to other sectors rated by CSE

2. Planning Commission deputy chairperson Montek Singh Ahluwalia and Union minister of state for environment and forests (independent charge) Jayanthi Natarajan release the ratings

3. Three companies share the top award – though their performance can only be termed as ‘average’

4. The findings have implications for the expansion plans of this core sector. If performance remains as poor, then growth will come at the cost of environment and lead to protest and unacceptable degradation

4. Findings lead us to ask: is Indian industry’s concern for the environment on a downslide?

5. CSE says the sector has huge potential to improve. Presents a road map for improvement in efficiency and green performance.

The GRP has analysed all the top steel making plants in the country (pdf see attached list) to find out how ‘green and clean’ the sector is – how much resources it uses, how much it emits, how it disposes its wastes, and how it deals with issues of local communities.

CSE’s Green Rating Project is a 15-year old programme – the only public disclosure programme of its kind in India — which was envisaged as a tool to push for improvement in policy and practices in industrial sectors. It does this by assessing, rating and publishing the environmental and social performance of the companies.

The Project has already rated the automobile, paper, chlor-alkali and cement sectors; iron and steel is the fifth key industrial sector rated by it. In all the sectors, GRP’s efforts have led to significant improvements in environmental performance of companies and better environment policy formulation by the government.

What the rating found

The GRP rating process is extremely rigorous, independent, participatory and transparent. The GRP rates companies that agree to participate voluntarily as well as those who do not. Data is collected from many sources, including industry, and verified by plant and site visits.

On the basis of its findings, the Project also confers the Five Leaves Awards on the plants, which are rated the most environmental friendly.

In the case of the iron and steel sector, 21 companies, with over 0.5 million tonnes of annual capacity, were rated on over 150 parameters – from technology to process efficiency and from pollution to occupational health and safety and compliance. The rating of steel sector took two years to complete.

As a whole, the sector received a mere 19 per cent marks and the One Leaf Award. This has to be compared to rating of the an equally polluting sector, cement sector, which in 2005 got 36 per cent and Three Leaves Award. It shows that this core sector, which includes the biggest and most powerful names in Indian industry, has a long way to go.

Of the 21, three companies scored over 35 per cent marks – and got the Three Leaves: they are Ispat Industries, in Raigad district of Maharashtra, Essar Steel in Hazira (Gujarat) and Rashtriya Ispat Nigam Limited (RINL or Vizag Steel), based in Visakhapatnam, Andhra Pradesh. The Three Leaves Award represents ‘average’ performance under GRP.

Tata Steel of Jamshedpur was at the fifth spot, while Jindal Steel and Power of Raigarh was at the ninth. SAIL plants in general were found be non-transparent and non-compliant. Only the SAIL Rourkela plant participated and got a One Leaf Award; the rest – Bhilai, Durgapur, Bokaro and Burnpur – did not participate in the Project voluntarily. Hence, they were rated on the basis of available information and found to be poor (pdf see attached sheet).

Some of the other key findings of the GRP rating exercise were:

The Indian iron and steel sector’s energy consumption of 6.6 GCal/tonne is about 50 per cent higher than the global best practice.

Process water consumption, excluding power generation, townships and other downstream operations, is a high 3.5 m3/tonne – over three times the global best practice.

The large-scale plants were found to be highly wasteful on land. They have close to 1,200 hectares (ha) of land per million tonne of installed capacity; a well-designed plant does not need more than 200 ha. If all the residual land with steel plants were to be properly utilised, the industry can produce more than 300 million tonnes steel, not the 75 million tonnes it is producing today. In fact, the steel industry will not need extra land till 2025.

Most steel plants were found to be non-compliant with pollution norms.

“The poor environmental performance of this sector is a measure of the failure of the regulatory institutions in the country. Nobody is asking this sector to improve its green bottom-line. Nobody is measuring and monitoring its actual performance. We should not be surprised. The country has worked to decimate its pollution regulatory paraphernalia – the steel sector is a hard reminder of this.” Says Sunita Narain, director general, CSE.

Chandra Bhushan, CSE’s deputy director general and head of the Green Rating Programme, points out, “The iron and steel sector’s score is the lowest compared with the other sectors that GRP has rated previously. In fact, the steel sector not only has the worst pollution compliance record, it was also found to be highly non-transparent and poor on information disclosure.”

Downslide: Indian industry gives the shove to environment

What do CSE’s green rating exercises point to in terms of the overall performance of industry in India?

“When we had begun our rating way back in the mid-1990s, Indian industry was starting to learn environmental management. By the time we rated the cement sector in 2005, we noted that Indian industry had mainstreamed environment management into its policy and practices. But in 2012, we are revising this assessment. The environmental non-performance of the iron and steel industry, a core sector of the economy — involving biggest industry names and having a separate Union ministry – has left us worried.”, Says Sunita Narain.

Even the companies which have performed relatively better in the rating programme seem to have done so incidentally. The top three companies have invested in efficient technologies to cut their energy and material costs – this, incidentally, has also improved their environmental performance.

According to Chandra Bhushan, what the GRP exercise has found about the iron and steel sector points to a worrying future, which calls for immediate corrective action. The sector is rapidly expanding: within a decade, it has moved from being a 24-million tonne industry to a 70-million tonne behemoth, and is aspiring to the 300-million tonne target in the next two decades. If the business-as-usual continues, the steel sector will create insurmountable environmental and social problems.

What can be done to stem the rot?

There is hope, of course.

“The future road map for the sector is clear. It will have to reduce its ecological footprints drastically, invest in health and safety of its workers and treat local communities as stakeholders and beneficiaries.” Chandra Bhushan added.

Plants will have to halve their energy use, use only that much water which is needed for evaporative losses and thus stop discharging waste water, and recycle and reuse their solid wastes. And they will have to take measures to reduce air emissions significantly.

In fact, the more the companies invest in environmental performance the better will be their cost-efficiencies. The investment in energy efficiency pays back as does the reuse and recycling of waste. The less the use of material and energy, the lower the costs and lower the burden of disposal into the environment.

“Therefore, good resource management not only makes the steel sector more efficient, but also protects the environment. This is a win-win that we must strive towards,” says Narain.

“On this eve of World Environment Day, the steel sector rating is a reminder of the challenges, but also the enormous potential of bringing about change,” she adds.

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