India’s coal-fueled steel expansion threatens global climate goals: Report

India’s aggressive plans to double its steelmaking capacity by 2030 could prevent the global steel industry from meeting critical climate targets, according to a new report from Global Energy Monitor (GEM). The report raises urgent concerns about India’s reliance on coal-based technologies and its potential to derail global decarbonisation efforts in one of the world’s most polluting industries.

India's steel plans threaten climate

The steel industry is responsible for nearly 9% of global greenhouse gas emissions. The International Energy Agency (IEA) has set a target for 38% of global steelmaking capacity to rely on lower-emission electric arc furnaces (EAF) by 2030. GEM’s data projects that the world is on track to reach just 36%—a shortfall that the report attributes primarily to India’s coal-heavy development pipeline.

“India is now the bellwether of global steel decarbonisation,” said Astrid Grigsby-Schulte, project manager of the Global Iron and Steel Tracker at GEM and co-author of the report. “If the country does not increase its plans for green steel production, the entire sector will miss an important milestone. So goes India, so goes the world.”

According to GEM, India now accounts for over 40% of global steelmaking capacity in development—352 million tonnes per annum (mtpa)—and more than half of that capacity is coal-based. In contrast, China, the world’s largest steel producer, has only 140 mtpa in development. China’s steel production has plateaued and is expected to decline after 2025, while India plans to expand from around 200 mtpa to over 330 mtpa by the end of the decade.

The report notes that India's steel industry emits approximately 2.6 tonnes of carbon dioxide per tonne of steel—roughly 20–25% more than the global average. This is partly due to India’s reliance on coal and a lack of alternatives such as scrap steel, natural gas, and green hydrogen.

“India is the only major steel-producing nation that has so much coal-based capacity in the pipeline,” said Henna Khadeeja, a research analyst with GEM and contributor to the report.

“There is potential for India to change course. Much of the planned capacity is still on paper. Only 8% of it has actually broken ground. This means there is still a window to shift toward lower-emission technologies.”

Coal dependence hurts green shift

India’s dependence on coal is shaped by several structural challenges. Domestic coal is cheap and abundant. The country’s blast furnaces are relatively new, with 20 to 25 years of operating life remaining. Natural gas is limited, and steel scrap recycling is largely informal and inefficient. High-quality iron ore is also in short supply.

Despite these hurdles, GEM’s report emphasises that India has the opportunity to transition to greener technologies. Failure to do so may have consequences beyond climate goals. India’s steel exports are currently a small portion of its total production, but major markets, like the European Union, are introducing carbon border taxes that could penalise high-emission products.

“India may be better off tolerating some short-term pain of technological upgrading to make its steel cleaner for long-term competitiveness gain,” said Easwaran Narassimhan of the New Delhi-based think tank Sustainable Futures Collaborative.

The report includes for the first time data from GEM’s Global Iron Ore Mine Tracker. It shows that 98% of mined iron ore goes into steel production. In 2024, global iron ore production reached 2,059 million tonnes. Australia and Brazil together accounted for 64% of global output—43% and 21%, respectively. These countries are well-positioned to support green steel development through their iron ore reserves and renewable energy resources.

“With ever-growing renewable energy resources, both Australia and Brazil are well-positioned to produce green hydrogen and become leaders in green ironmaking,” the report states. “Additionally, they may develop strong trade ties with booming steel industries like India in order to meet the need for green steel materials.”

India's steel plans raise emissions

The global push toward green steel is gaining traction. EAF capacity has grown steadily since 2021, and countries like the United States and Iran lead in direct reduced iron (DRI) production using cleaner technologies. While EAFs are more evenly distributed worldwide, coal-based blast furnace–basic oxygen furnace (BF-BOF) systems remain concentrated in Asia.

India’s steel sector currently contributes up to 12% of the country’s total greenhouse gas emissions. If current production plans proceed, that figure could double within five years, according to the GEM report.

At the same time, India has pledged to install 500 gigawatts of renewable energy by 2030—enough to power nearly 300 million homes. It has already surpassed 100 gigawatts of solar installations, most of which came in the past decade. India has also committed to reaching net-zero carbon emissions by 2070.

Grigsby-Schulte stressed the urgency of aligning India’s steel expansion with its broader climate commitments. “There is no route to global decarbonisation of steel without India on board,” she said. “This is a moment of decision.”

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