Coal-based steelmaking key risk to India’s green goals, shows study

India’s young fleet of blast furnaces, combined with ongoing investments in the emissions-intensive coal-based steelmaking technology, pose major challenges to the nation’s ambitious green goals, a study said.

The South Asian nation’s current approach largely involves integrating decarbonization strategies once the capacity is built, rather than transitioning away from coal-based production to green steelmaking, the Global Energy Monitor said in a report.

This “build now, decarbonize later” approach misses the opportunity to develop steel capacity using low-emissions technologies, which could make India a leader in green steel capacity, save on decarbonization efforts later, and reduce current and future stranded asset risk in the industry, the report said.

“While India’s short-term solutions to reduce emissions without significant modifications to the existing production may lower emissions intensities, India will need to make the grand switch away from coal to fully decarbonize the industry and sustain its production in the long run,” it said.

“India must expand its narrow focus from merely developing large steel capacities to developing green steel capacities, thereby establishing itself as a leader in green steel, it added.

In September, the ministry of steel published a roadmap for greening the nation’s steel sector to support the national goal of reducing emissions by 45% from 2005 levels across the economy by 2030.

The report discusses steps to promote the adoption of green steel through procurement targets, certification ecosystems; emissions disclosures by end-users; and tax incentives, among other steps.

However, the report does not lay out a roadmap for reducing India’s heavy reliance on coal-based blast furnace-basic oxygen furnace (BF-BOF) production or plans to phase these units out eventually, the report said.

Driven by its National Steel Policy, India’s growth plans position it as the country with the largest steelmaking capacity under development, surpassing even China.

The use of coal-based rotary kilns for iron production and the limited availability of alternative fuels create significant challenges for transitioning to green hydrogen-based iron production, the report added.

Coal-based furnaces last a long time and are hard to make eco-friendly, which could lead to a financial loss of $124–187 billion from new steel capacity in India, especially since the country aims to have no net emissions by 2070, it said.

India’s steel industry will face immense pressure to increase production based on the country’s growth trajectory, with India on track to become the third-largest national economy by 2032. As a result, the annual steel demand within the country is expected to grow from 136 million tons (mt) in 2024 to 221–275 mt by 2034, with a global steel demand rise of 1.2% in 2025, the study said.

The study suggested that with over 86% of India’s planned basic oxygen furnace (BOF) capacity not yet in the construction phase, there emerges an opportunity for India to shift its strategy.

“Transitioning to green steel production technologies now can help the country avoid the risk of stranded assets when these coal-dependent plants are rendered obsolete by future decarbonization policies and market shifts. Transitioning early would enable India to meet both global and domestic sustainability goals while securing a competitive advantage in the emerging green steel market,” it highlighted.