India’s ambitious plans for expansion its steel production capacity by 2030 are raising alarms among climate experts, who warn that the country’s reliance on coal-based technologies could significantly hinder global efforts to reduce greenhouse gas emissions.
According to a recent report by the Global Energy Monitor (GEM), India aims expansion its steel production capacity from the current 200 million tonnes to over 330 million tonnes by 2030. However, the majority of this expansion is centered around coal-dependent blast furnace-basic oxygen furnace (BF-BOF) methods, which are highly carbon-intensive. This approach threatens to derail both India’s national climate goals and international targets for reducing emissions in the steel industry.
The steel sector is a significant contributor to India’s carbon footprint, accounting for approximately 12% of the country’s total emissions. Currently, producing one tonne of steel in India results in 2.55 tonnes of CO₂ emissions, which is about 38% higher than the global average of 1.85 tonnes. If the planned expansion proceeds without a shift to cleaner technologies, India’s steel industry could emit an additional 680 million tonnes of CO₂ by 2030.
The International Energy Agency (IEA) recommends that at least 37% of global steel production should utilize lower-emission electric arc furnaces (EAFs) by 2030 to stay on track for net-zero emissions by 2050. However, India’s current plans fall short of this target, with projections indicating that EAFs will constitute only 36% of the country’s steel production by 2030.
Despite these concerns, there is still an opportunity for India to pivot towards greener alternatives. The GEM report notes that 92% of India’s planned steelmaking capacity is yet to be constructed, providing a critical window to adopt cleaner technologies such as EAFs powered by renewable energy or hydrogen-based direct reduced iron (DRI) methods.
Transitioning to green steel production is not without challenges. India faces hurdles such as limited availability of high-quality scrap metal, underdeveloped hydrogen infrastructure, and the high costs associated with green hydrogen production. Moreover, the country’s price-sensitive market may resist the premium costs of green steel without supportive legislation and incentives.
Financial risks also loom large. The GEM report warns that India’s continued investment in coal-based steelmaking could result in up to $187 billion in stranded assets, as global markets increasingly favor low-carbon products and impose carbon border taxes.
In response to these challenges, India’s Ministry of Steel has introduced a green steel taxonomy and a roadmap to facilitate the industry’s transition to low-carbon technologies. These initiatives aim to set clear benchmarks for emissions reductions and promote the adoption of cleaner production methods.
As the world’s second-largest steel producer, India’s decisions of expansion in the coming years will be pivotal in shaping the global steel industry’s trajectory towards sustainability. The country’s ability to balance its industrial growth with environmental responsibilities will significantly influence international climate goals and the future of green steel production.
