India’s ambitious plan to double its steel production by 2030 could derail both its domestic climate targets and international efforts to cut emissions from one of the world’s most polluting industries, according to a new report from Global Energy Monitor (GEM).
As the world’s second-largest steel producer, India is at a critical crossroads, the report said. With most of its upcoming steel projects relying heavily on coal, the country risks becoming a major obstacle to the global transition toward greener steelmaking.
“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 ramp up green steel production, the entire sector could fall short of key climate milestones. So goes India, so goes the world.”
Steel Emissions Could Double
Currently, steelmaking contributes about 12% of India’s total greenhouse gas emissions. According to GEM’s findings, that figure could double in the next five years if the sector grows as projected without a shift in technology.
Meanwhile, India is working toward an ambitious clean energy goal — 500 gigawatts of renewable power by 2030. The country has already surpassed 100 gigawatts of installed solar capacity, most of which was built over the past decade. India has also pledged to achieve net-zero emissions by 2070.
However, the steel sector remains a sticking point. Steel production globally accounts for nearly 9% of emissions. The International Energy Agency has called for at least 37% of the world’s steel to be made using lower-emission electric arc furnaces (EAFs) by 2030. Current trends suggest the world may fall slightly short, largely due to India’s coal-dominated development pipeline.
India’s Unique Challenge
India plans to boost its steel capacity from 200 million to over 330 million tonnes annually by 2030. Of the 352 million tonnes of global steel capacity in development, over 40% is in India. GEM reports that more than half of India’s planned new capacity will use coal-based technologies.
“India is the only major steel-producing nation with such a significant coal-based pipeline,” said Henna Khadeeja, a GEM research analyst and report contributor.
On average, India emits about 2.6 tonnes of carbon dioxide for every tonne of steel produced—around 25% higher than the global average. In contrast, China, the top steel producer, has curbed per-tonne emissions by using more recycled scrap steel and retiring older coal-based plants.
Several factors contribute to India’s coal dependency: abundant and cheap domestic coal, limited availability of natural gas, a weak scrap recycling system, and a fleet of blast furnaces with decades of operational life remaining.
A Narrow Window for Change
Despite the challenges, GEM’s report offers hope. As only 8% of India’s planned steel capacity has begun construction, the country still has time to pivot toward cleaner technologies such as electric arc furnaces or hydrogen-based production.
“There is potential for India to change course,” said Khadeeja. “Much of the planned capacity is still on paper, offering an opportunity to shift toward low-emission alternatives.”
Failing to do so could have economic consequences. Though steel exports are a minor part of India’s total output, they could be hit by the European Union’s incoming carbon border tax, which penalizes imports based on their carbon footprint.
“India may be better off enduring some short-term costs for cleaner technologies to gain long-term competitiveness,” said Easwaran Narassimhan from the New Delhi-based think tank Sustainable Futures Collaborative.
As the world looks to meet climate goals and clean up high-emission industries, India’s decisions in the coming years may determine not only the future of its steel sector but also the success of global decarbonisation efforts.