Green Steel Milestone Within Tantalizing Reach

The global steel industry stands at a pivotal crossroads in its decarbonization journey, with new data revealing both promising progress and concerning trends. According to the latest annual report from Global Energy Monitor, the sector is on track to reach 36% of global steelmaking capacity using lower-emissions electric arc furnaces by 2030, representing approximately 868 million metric tons per annum. This figure approaches, but falls slightly short of, the International Energy Agency's target of 38% EAF capacity by the end of the decade. The gradual increase in EAF adoption signals positive momentum in an industry responsible for roughly 7% of global carbon emissions. However, the data simultaneously reveals the persistent dominance of coal-based production methods, particularly in rapidly industrializing economies. The report, which provides one of the most comprehensive reviews of global iron and steelmaking capacity, documents each operating asset and development project worldwide, offering unprecedented visibility into the industry's transformation. This granular tracking reveals that while technological transition is underway, the pace remains insufficient to align with global climate goals without accelerated action from key market players.

India's Coal-Centric Expansion Threatens Climate Goals

India has emerged as the decisive factor in the global steel sector's decarbonization trajectory, with its development plans potentially determining whether international climate benchmarks will be achieved. The country's ambitious goal of doubling steel production capacity by 2030 has positioned it as the epicenter of industry growth, now accounting for over two-fifths of global steelmaking capacity in development, a substantial 352 mtpa compared to China's 140 mtpa. However, the environmental implications of this expansion are concerning, as India currently accounts for more than half (200 mtpa) of all coal-based steelmaking capacity under development worldwide. The country's steel industry already holds the unenviable distinction of being the most carbon-intensive globally, emitting approximately 20-25% more CO₂ per metric ton than Chinese producers. This carbon-intensive growth path threatens to undermine global progress toward cleaner steel production. Without a significant shift in India's approach to new capacity, the emissions from its expanding steel sector could effectively cancel out decarbonization gains made elsewhere, highlighting the critical importance of technology choices in new installations rather than just incremental improvements to existing facilities.

Ambitious Announcements Outpace Actual Construction

Despite India's aggressive capacity expansion announcements, the report reveals a significant gap between planning and implementation that raises questions about the timeline for projected growth. While India's steel capacity in development surged by over a third in the past year, from 258 mtpa in 2024 to 352 mtpa in 2025, construction has commenced on only 28 mtpa, representing a mere 8% of announced projects. This disparity suggests that India's steel expansion may be progressing more slowly than headline figures indicate, potentially providing a critical window of opportunity for policy interventions and technology reassessment. The lag between announcements and groundbreaking could allow for reconsideration of production methods, potentially incorporating more low-carbon technologies before facilities are locked into carbon-intensive pathways for decades. Industry analysts note that this implementation gap might reflect financing challenges, regulatory hurdles, or strategic pauses to evaluate emerging technologies. However, the substantial pipeline of planned projects indicates that even with delays, India remains on course to dramatically reshape the global steel landscape, making its technology choices all the more consequential for industry-wide emissions trajectories.

Iron Ore Giants Hold Keys to Green Transformation

The concentration of global iron ore production in Australia and Brazil positions these nations as potential catalysts for the steel industry's green transformation. GEM's report, which for the first time incorporates data from the Global Iron Ore Mine Tracker, reveals that these two countries account for a commanding 64% of worldwide iron ore production, Australia at 43% and Brazil at 21%. With iron ore serving as the fundamental raw material for primary steel production (approximately 98% of all iron ore mined goes into steelmaking), these resource-rich nations possess significant leverage to influence production methods throughout the value chain. Both countries benefit from abundant renewable energy potential, creating favorable conditions for green hydrogen production, a critical component for emerging low-carbon ironmaking technologies such as hydrogen-based direct reduction. This combination of iron ore reserves and renewable energy capacity positions Australia and Brazil as natural leaders in green ironmaking, potentially establishing new industry standards and supply chains. Their strategic decisions regarding resource allocation and export policies could significantly influence the pace of steel decarbonization globally, particularly in resource-constrained but rapidly industrializing nations like India.

Renewable Resources Create Strategic Advantage

The convergence of vast iron ore reserves and growing renewable energy capacity provides Australia and Brazil with a unique strategic advantage in the emerging green steel economy. Both countries are rapidly expanding their renewable energy sectors, with Australia particularly well-positioned due to its world-class solar resources and expanding wind capacity. This renewable energy potential creates ideal conditions for green hydrogen production at scale, a critical enabler for next-generation steelmaking technologies that can eliminate coal dependence. The geographical advantage extends beyond domestic production capabilities; proximity to major Asian steel markets positions Australia especially well to develop integrated green steel supply chains. Industry experts anticipate that these countries could leverage their resource advantages to establish premium pricing for green iron products, potentially accelerating the economic case for decarbonization across the sector. The development of green hydrogen hubs near iron ore production centers could create industrial symbiosis opportunities, further enhancing cost competitiveness. As carbon border adjustment mechanisms and green procurement policies gain traction globally, first-mover advantage in green iron production could translate into significant market share and investment opportunities, potentially reshaping traditional trade relationships in the steel value chain.

Trade Dynamics Poised for Transformation

The evolving landscape of steel decarbonization is set to fundamentally reshape global trade relationships, with resource-rich nations potentially forming new strategic partnerships with rapidly industrializing economies. Australia and Brazil, with their abundant iron ore reserves and renewable energy potential, are well-positioned to develop strong trade ties with booming steel industries like India's to meet growing demand for green steel materials. This emerging dynamic could create new interdependencies, with countries like India potentially becoming increasingly reliant on imports of green iron products to meet both their industrial expansion goals and climate commitments. The report suggests that such partnerships could accelerate technology transfer and adoption of lower-carbon production methods, potentially helping India leapfrog directly to cleaner technologies in portions of its expanding steel sector. However, these evolving trade relationships also raise questions about economic sovereignty and resource security, particularly for countries with ambitious industrial development plans. The transition could create winners and losers among traditional steel-producing regions, with those lacking either iron ore resources or renewable energy potential facing competitive disadvantages. As carbon pricing mechanisms become more widespread, these trade dynamics will likely intensify, potentially accelerating both the geographic redistribution of production and the technological transformation of the industry.

Rhetoric-Reality Gap Persists in Decarbonization Efforts

Despite growing industry commitments to decarbonization, the report highlights a persistent gap between rhetoric and reality in steel sector transformation. While numerous steel producers have announced ambitious net-zero targets and sustainability initiatives, the continued dominance of coal-based production methods in development pipelines suggests a disconnect between long-term aspirations and near-term investment decisions. This contradiction is particularly evident in India, where capacity expansion plans remain overwhelmingly oriented toward conventional, carbon-intensive technologies despite the country's climate commitments. The report suggests that without stronger policy frameworks, financing incentives, and market signals favoring low-carbon production, the industry may continue to prioritize familiar technologies and lower upfront costs over long-term environmental performance. This tendency creates the risk of carbon lock-in, where today's investment decisions commit the sector to decades of high emissions. Industry experts note that the window for aligning new capacity with climate goals is rapidly narrowing, as facilities built in this decade will likely operate well into the 2050s—the target date for net-zero emissions in many jurisdictions. Bridging this gap between ambition and action will require coordinated efforts from policymakers, investors, and industry leaders to create both the incentives and penalties needed to shift capital allocation toward genuinely sustainable technologies.

Decisive Decade Demands Immediate Action

The findings of the Global Energy Monitor report underscore that this decade represents a make-or-break period for steel industry decarbonization, with decisions made now determining whether climate goals remain achievable. As Astrid Grigsby-Schulte, Project Manager of the Global Iron and Steel Tracker, emphatically stated, "India is now the bellwether of global steel decarbonisation. If the country does not increase its plans for green steel production, the entire sector will miss an important milestone. So goes India, so goes the world." This assessment highlights the outsized influence that India's technological choices will have on global industry emissions. The report suggests that the next few years represent a critical intervention point, as many announced projects have yet to finalize technology selections or commence construction. This creates a narrow but significant opportunity for policy interventions, financial incentives, and international cooperation to influence development trajectories before carbon-intensive assets are locked in for decades. Industry analysts note that the technical solutions for lower-carbon steelmaking exist today, but their deployment at scale requires supportive policy frameworks, innovative financing mechanisms, and market recognition of green premium products. The report concludes that without immediate and coordinated action to redirect development plans, particularly in India, toward cleaner technologies, the steel industry risks undermining global climate mitigation efforts despite progress in other sectors.

Key Takeaways:

• The global steel industry is approaching but may narrowly miss the International Energy Agency's target of 38% electric arc furnace capacity by 2030, with projections showing 36% adoption representing 868 million metric tons per annum

• India has become the decisive factor in steel sector decarbonization, accounting for over two-fifths of global steelmaking capacity in development (352 million metric tons) but also more than half of all coal-based capacity under development, with only 8% of announced projects actually under construction

• Australia and Brazil control 64% of global iron ore production and possess abundant renewable energy resources, positioning them as potential leaders in green ironmaking and strategic trade partners for countries like India that need to balance industrial growth with emissions reduction