India Accounts for over 60% of Upcoming Coal-Based Steelmaking Capacity Globally: Report

Why It Matters

The concentration of new coal‑based steel capacity in India and China hampers global decarbonization goals, keeping the steel sector’s carbon footprint high and delaying the transition to cleaner processes such as electric‑arc furnaces and hydrogen‑based direct reduction.

Key Takeaways

• India plans over 60% of new coal‑based steel capacity worldwide
• Only 5% of announced capacity has begun construction
• China and India together target 86% of new coal capacity
• Coal‑based blast furnaces generate roughly 88% of steel emissions
• EAF share rose to 34% globally, still far from decarbonization

Pulse Analysis

India’s outsized share of new coal‑based blast‑furnace projects reflects both its massive domestic steel demand and the relative affordability of traditional iron‑making. With 93% of its upcoming iron‑making capacity relying on coal‑intensive technology, the country is positioning itself as the primary driver of global steel output growth through 2035. This trajectory contrasts sharply with the modest rise in electric‑arc furnace (EAF) capacity, which only nudged up to 34% of global steelmaking, indicating that policy incentives and financing for low‑carbon alternatives remain limited.

The environmental stakes are stark. Coal‑based steel production accounts for roughly 88% of sector emissions, contributing about 11% of total global CO₂ output. The report highlights that merely 5% of the announced Indian capacity has broken ground, suggesting a potential window for intervention before the projects lock in decades of emissions. Meanwhile, China’s existing blast‑furnace fleet shows little intent to retire, further entrenching fossil‑fuel reliance. The combined 86% share of new coal‑based capacity by India and China underscores a geopolitical challenge: the two largest steel producers hold the keys to the industry’s carbon trajectory.

Transition pathways exist but require coordinated action. Accelerating the deployment of electric‑arc furnaces, expanding direct‑reduced‑iron (DRI) using green hydrogen, and retrofitting existing blast furnaces with carbon‑capture technologies could collectively curb emissions. Policy levers such as carbon pricing, targeted subsidies for low‑carbon steel, and stricter retirement mandates for aging blast furnaces would create market pressure for cleaner alternatives. As investors and regulators increasingly scrutinize climate risk, the steel sector’s strategic choices in India and China will shape global decarbonization timelines and influence supply‑chain sustainability across multiple industries.