India takes lead in coal-based steel production, surpassing China

The latest Global Energy Monitor report reveals a worrying trend: global coal-fired steelmaking capacity is increasing rather than decreasing, despite the urgent need for decarbonisation.

The report indicates that the production capacity of carbon-based steel will increase from 350 MTPA in 2021 to 380 MTPA in 2022, with Asia being the center of this production. China and India account for 79 per cent of total capacity additions, indicating a critical time for investment decisions in the region.

Asia's heavy reliance on carbon steel production poses a significant climate risk, as 83% of blast furnaces are operational, 98% are under construction and 94% are planned. The need for rapid investment shifts is emphasized to avoid climate disaster, given the global shift towards green technology and rising carbon prices.

India has overtaken China for the first time in expanding coal-based steel production capacity. While some efforts have been made to switch to cleaner production methods, progress has been slow.

According to the International Energy Agency's NetZero scenario, the steel industry must prioritize the transition to electric arc furnace capacity, targeting 53% by 2050. This requires abandoning or cancelling 347 MT of coal-fired capacity and adding 610 MT of electric arc furnace capacity.

Caitlin Swalec, Program Director for Heavy Industry at Global Energy Monitor, said, “Steel producers and consumers need to raise ambition for decarbonization plans. The transition away from coal-based steelmaking is underway but moving far too slowly. Developers that add coal-based capacity now run the risk of facing billions in write-downs in the future.”

While there is some movement towards cleaner production routes globally, the report highlights just how far the steel industry is from achieving the desired shift away from coal. European steelmakers, despite being leaders in clean steel production, still face challenges in fully transitioning to clean steel and avoiding high-emission technologies.

In conclusion, the steel industry must prioritize decarbonization plans and accelerate the shift to non-carbon production methods. Governments, steel producers and consumers must seize the opportunity to build a sustainable and environmentally responsible future, recognizing the urgent need for decarbonisation in the face of the climate crisis.

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