India's steel expansion threatens climate goals and global efforts to
clean up industry: report
[May 20, 2025] By
SIBI ARASU
BENGALURU, India (AP) — India’s plans to double steel production by the
end of the decade could jeopardize its national climate goals and a key
global target to reduce planet-heating gas emissions from the steel
industry, according to a report released Tuesday.
The report by Global Energy Monitor, an organization that tracks energy
projects around the globe, said efforts to decarbonize steelmaking are
gaining traction around the world. However, in India, which is the
world's second largest steel-producing nation, overwhelming reliance on
coal-based technologies presents a big challenge.
“India is now the bellwether of global steel decarbonization,” said
Astrid Grigsby-Schulte, project manager of the Global Iron and Steel
Tracker at GEM and report co-author. “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.”
Currently, up to 12% of India’s greenhouse gas emissions, which go into
the atmosphere and heat the planet, come from steelmaking. That number
could double in five years if steel is produced in line with the
government’s plans, according to the report.
At the same time, India wants to produce 500 gigawatts of clean power —
enough to power nearly 300 million Indian homes — by the end of this
decade. The South Asian nation recently crossed the milestone of
installing 100 gigawatts of solar power, most of which was installed in
the last 10 years.
By 2070, India also aims to go net zero, that is, it will either
eliminate all carbon dioxide pollution it emits or cancel it out by
using other methods, such as planting trees that absorb carbon.
Steel production is one of the most carbon polluting industries,
responsible for nearly 9% of global greenhouse gas emissions. The
International Energy Agency has set a target for 37% of global
steelmaking capacity to rely on lower-emission electric arc furnaces by
2030. Current projections by GEM show the world reaching just 36% — a
shortfall largely due to India’s coal-heavy pipeline.
India plans to expand its steel production capacity from 200 million to
over 330 million tonnes per year by 2030. According to the new data,
over 40% of global capacity in development — about 352 million tonnes
per annum — is in India, with more than half of that using coal-based
capacity.
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A worker lifts a steel sheet after cutting it in a specific design
at a factory in a suburb of Bengaluru, India, Feb. 27, 2025. (AP
Photo/Aijaz Rahi, File)
 “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 who also
worked on the report.
India’s steel sector releases approximately 2.6 tons of carbon
dioxide per ton of steel, roughly 25% more than the global average.
China, the world’s largest steelmaker, has managed to keep its
emissions lower per ton by producing more scrap-based steel and
retiring older coal-based plants.
India’s heavy dependence on coal for steelmaking is driven by a
combination of factors: low-cost domestic coal, a relatively young
fleet of blast furnaces that still have 20–25 years of operational
life left, and a lack of natural gas and steel scrap. The country’s
scrap recycling ecosystem remains informal, and high-quality iron
ore is scarce.
“There is potential for India to change course,” said Khadeeja of
GEM. “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.”
The consequences of producing carbon polluting steel may go beyond
climate goals. While India’s steel exports are only a small share of
its overall production, they could suffer as major markets like the
European Union begin enforcing carbon border taxes next year.
“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.
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