As the call for shifting away from fossil fuel gets louder, a new global report warns that continued investments in new coal-based steelmaking capacity and the planned relining of blast furnaces to extend operations will obstruct the industry’s transition to clean energy.
India has been found to be playing a key role in the sector. The sixth annual report by Global Energy Monitor underlines how India is “developing over 60% of new coal-based blast furnace capacity globally, and 93% of its ironmaking capacity under development will use coal-based technology.”
The silver lining for India is the fact that just 5% of the proposed expansion has actually broken ground, “leaving a significant intervention opportunity,” the report says.
The study points out that China is also playing a key role in the continuation of coal in steel industry, with “around 94% of its massive blast furnace capacity has no plans for retirement, and the country is the second-largest net developer of blast furnace capacity after India.”
Coal use increased over last year
Global Energy Monitor, in its report, warns that 319 million tonnes per annum (mtpa) of coal-based blast furnace capacity globally have either been announced by the industry or are under construction, a 5% increase over the previous year, when green steelmaking is the one way forward in a world facing severe climate change impact.
“Together with an additional 80 mtpa of capacity with planned re-lining, new blast furnace investments far outpace the 141 mtpa of currently operating blast furnace capacity that has announced retirement plans,” says the release. Global blast furnace capacity is projected to grow by a net 88 mtpa by 2035, the report points out.
With about 88% of all steel sector emissions generated by coal-based production and the steel industry responsible for 11% of global CO2 emissions, investments in greener technologies are an imperative for global transition towards Net Zero emissions.
Green iron making pushed back
But the share of green steelmaking capacity went up only marginally in 2025. Advance in green ironmaking also remains minimal.
“The outlook remains bleak for steel’s transition away from fossil fuels. The ball is in India and China’s court, as the two countries plan 86% of new coal-based capacity,” said Astrid Grigsby-Schulte, project manager of the Global Iron and Steel Tracker at Global Energy Monitor.
Pivoting to lower-emissions technologies and using existing EAF capacity more effectively are two immediate steps the countries can take to have a profound effect on the direction of the steel industry,” the official added. An Electric Arc Furnace (EAF) facility is a modern steelmaking plant that melts steel scrap or direct reduced iron (DRI) using high-power electrical arcs, reducing carbon emissions compared to traditional blast furnace-basic oxygen furnace (BF-BOF) steelmaking, often cutting emissions by over 60–70% when utilizing scrap steel.
Green steel roadmap for India
India has some encouraging signs for moving away from coal in steel sector, point out experts.
India is faced with a 32% cost increase under the European Union’s Carbon Border Adjustment Mechanism (CBAM) and is already developing new, lower-emissions capacity specifically for export to European markets.
Japanese investment in coal-based steel in India is strong. JFE Steel Corp aims to invest $2 billion in the country by establishing a coal-based joint venture with India’s JSW Steel.
The Union Ministry of Steel in India has also published a green steel roadmap. Among other things, India aims at slowly increasing the share of scrap in its steel production to the global average of 31% in order to conserve raw material consumption, reduce raw material imports, and lower steel sector emissions. In 2024, India introduced the Green Steel Taxonomy, becoming the first country to introduce such definitions.