A booming and coal-heavy steel sector risks India’s green goals

India’s booming and coal-dependent steel industry means the country faces a “rocky and uncertain path” toward achieving its goal of reaching net zero by 2070, according to Global Energy Monitor.

The country has the most steelmaking capacity under development in the world, surpassing even China, the climate research group said in a report released Tuesday. The government’s National Steel Policy relies heavily on emissions-intensive coal-fired blast furnaces, and then trying to decarbonize them once they are built, rather than moving to green steelmaking, it said.

The plan doesn’t consider stepping away from the fossil fuel, Henna Khadeeja, a GEM researcher and lead author of the report, said in an interview. “All this coal locked-in only pushes India’s net zero target further away,” because retroactively removing carbon from the supply chain via other technologies will be “very difficult,” she said.


A spokesperson for the Ministry of Steel did not respond to a request for comment.

India is the world’s third-largest emitter and, given that it still has a rapidly growing population and economy, the rate at which it can decarbonize will have a major impact on global efforts to avoid the worst impacts of climate change. The steel sector accounted for 12% of the country’s emissions in 2022, and a building and infrastructure boom looks set to keep pushing that higher.

The government has set a target of raising the country’s annual crude steel output capacity to 300 million tons by 2030, almost doubling from 161 million tons in the 2022-23 financial year, although GEM doesn’t see it getting to that level until 2036. But while other steel-producing countries including China, Japan and the EU are increasingly adopting electric arc furnaces, which use steel scrap and electricity — India still heavily favors coal.

Some 86% of the country’s planned steel capacity will use basic oxygen furnaces that use the fossil fuel as a feedstock, according to GEM. Such a young fleet of highly polluting steel mills would expose India to a stranded asset risk of $124 to $187 billion, given its commitment to get to net zero by 2070, it said.

“The economic viability of these projects should be up for debate as the price for coking coal has increased significantly in recent years,” said Abhinav Bhaskar, co-founder at industrial decarbonization research firm Geneir. “India has limited resources and the majority is imported from Australia and other countries, leading to fiscal deficit.”

India’s government released a roadmap for decarbonizing its steel industry earlier this year, which includes plans for emissions monitoring, encouraging more production of green steel using fuels like hydrogen, and piloting carbon capture and storage technologies.

However, “there are multiple sources of emissions in a steel plant and adopting CCS on each point source emission is unfeasible,” Bhaskar said. “There is no viable geological storage in India for CCS.”