India’s Coal-Based Steelmaking Investments Threaten Net Zero Target, Warns Global Energy Monitor Report

India’s ongoing investments in new coal-based steelmaking, along with a young fleet of emissions-intensive blast furnaces, are putting the country’s ambitious Net Zero by 2070 target at risk, according to a new report from Global Energy Monitor. The report warns that these investments could lead to US$187 billion in stranded assets.

The Global Steel Plant Tracker reveals that India is home to the world’s largest pipeline of steelmaking capacity in development, with over 258 million tonnes per annum (mtpa) of announced or under-construction projects. A significant portion, over two-thirds, is based on emissions-intensive basic oxygen furnaces, while less emissions-intensive electric arc furnaces represent only 13% of the capacity.

Additionally, India’s steel sector has added more than 75 mtpa of operating blast furnace capacity in the past two decades, with more than 43 mtpa of this capacity set to be relined before 2030. This young fleet of blast furnaces presents a risk of emissions lock-in and poses challenges in transitioning to greener technologies, as many of these units are still recovering initial investment costs.

The reliance on coal as a reducing agent for direct reduced iron production further compounds the challenge. Over half of the country’s direct reduced iron capacity uses coal sourced from domestic high-ash coal, which is more emissions-intensive despite being cheaper.

India’s steel sector is already one of the world’s most emissions-intensive, with over 87% of its operating ironmaking capacity and 90% of its capacity in development relying on coal. The sector contributes over 240 million tonnes of CO2 emissions annually, accounting for about 12% of the country’s total carbon emissions. This figure is expected to double by 2030.

While short-term solutions may reduce emissions intensity, the report stresses that India must transition away from coal-based steel production to fully decarbonize the sector and ensure long-term sustainability.

Khadeeja Henna, Heavy Industry researcher at Global Energy Monitor, commented, “India’s ‘build now, decarbonize later’ approach to achieving a net-zero steel industry will backfire in the long run. While the 2024 roadmap and action plan for greening the steel sector is a positive step forward, transitioning away from coal-based production is more urgent. Substantial investments are needed to build a robust green steel ecosystem, not betting on emerging decarbonization technologies that have yet to prove their mettle.”