Global Steel Industry Doubles Down on Coal as New Capacity Outpaces Retirements – Indian PSU

The global steel industry continues to rely heavily on coal-based production, even as concerns grow over its impact on climate goals. According to the latest report by Global Energy Monitor, ongoing investments in coal-based steelmaking are significantly outpacing efforts to retire existing capacity.

The report reveals that 319 million tonnes per annum (mtpa) of coal-based blast furnace capacity has either been announced or is currently under construction worldwide, marking a 5% increase over the previous year. In addition, 80 mtpa of capacity is slated for relining, a process that extends the operational life of existing blast furnaces.

In contrast, only 141 mtpa of operating blast furnace capacity has announced retirement plans. As a result, global blast furnace capacity is projected to see a net increase of 88 mtpa by 2035.

The findings highlight the continued dominance of coal in steel production. Approximately 88% of emissions from the steel sector are generated from coal-based processes, while the industry as a whole accounts for 11% of global CO₂ emissions.

Despite the growing urgency for decarbonisation, progress toward cleaner alternatives remains limited. The share of green steelmaking capacity has increased only marginally over the past year, and advancements in green ironmaking technologies continue to lag.

The latest data underscores a troubling reality for the global steel sector: the transition to low-emission technologies remains slow, while coal-based capacity continues to expand—largely driven by India and China.

Electric Arc Furnace (EAF) steelmaking, considered a lower-emissions pathway, has seen only marginal progress. Its share of global operating capacity has increased by just one percentage point—from 33% to 34%—highlighting the limited pace of change.

In ironmaking, the picture is even more concerning. Only 10% of production currently relies on Direct Reduced Iron (DRI), a cleaner alternative to traditional coal-based blast furnace (BF) technology. More strikingly, just 2%—equivalent to about 4 million tonnes per annum (mtpa)—of operational DRI capacity uses green hydrogen as the primary reductant, a key requirement for achieving net-zero emissions. The overwhelming majority still depends on fossil fuels.

Astrid Grigsby-Schulte, Project Manager of the Global Iron and Steel Tracker at Global Energy Monitor, summed up the situation starkly, noting that the outlook for the steel industry’s transition away from fossil fuels “remains bleak.” She emphasized that the responsibility now lies heavily with India and China, which together account for 86% of planned new coal-based steelmaking capacity. According to her, a meaningful shift toward lower-emissions technologies and better utilization of existing EAF capacity could significantly alter the sector’s trajectory.

India, in particular, is emerging as the dominant driver of new coal-based expansion. The country is developing more than 60% of the world’s upcoming blast furnace capacity, with 93% of its ironmaking projects still reliant on coal-based technology. However, only 5% of these projects have actually broken ground, suggesting a crucial window for policy and investment interventions to steer the sector toward cleaner alternatives.

China, meanwhile, continues to anchor its steel production in traditional methods. Approximately 94% of its vast blast furnace capacity has no retirement plans, and the country ranks as the second-largest developer of new blast furnace capacity after India.

Taken together, these trends indicate that without decisive action from the world’s two largest steel producers, global efforts to decarbonize the steel industry could face significant setbacks.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy