The Indian secondary metallurgy sector, which accounts for about 47% of the country's steel production and emits about 50 million tons of carbon dioxide annually, will play a crucial role in India's transition to green metallurgy, according to the U.S.-based Institute for Energy Economics and Financial Analysis (IEEFA). This is stated in the report published on Friday, August 21.
Previous programs have demonstrated that energy-efficient technologies can lead to significant cost savings. However, their widespread adoption is hampered by shortcomings in project preparation, financing, technical assistance, and organizational capacity.
According to the IEEFA analysis, micro, small, and medium-sized enterprises (MSMEs) often prioritize working capital and capacity expansion over energy efficiency investments. Implementation rates improve when energy efficiency measures are directly linked to productivity and profitability.
Limited access to finance, small project sizes, low creditworthiness, and complex subsidy procedures also hinder investment. The IEEFA recommended targeted measures such as project preparation assistance, project pooling, risk-sharing mechanisms, longer loan terms, and technology effectiveness guarantees, rather than relying solely on larger subsidies.
Awareness-raising and training programmes have failed to create a sufficient number of projects ready for investment, as MSMEs also need support in choosing technologies, preparing suitable financing proposals and implementing projects. Previous programs also had difficulty maintaining networks of auditors, suppliers, and consultants after funding was cut off.
International models could be potential solutions, including the Chinese approach to risk allocation and banking consulting, as well as the Latin American energy saving insurance model, which combines financing with technical verification, standardized contracts and insurance guarantees, the IEEFA said.
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