A total of 319 million tonnes per annum (mtpa) of coal-based blast furnace capacity worldwide has either been announced or is under construction, marking a 5 per cent increase over the previous year, according to a new analysis by Global Energy Monitor (GEM).
The expansion comes despite mounting pressure on the steel industry to reduce emissions and transition toward cleaner production pathways.
GEM found that planned new blast furnace investments, along with another 80 mtpa of capacity slated for relining to extend plant operations, far exceed the 141 mtpa of operating blast furnace capacity currently scheduled for retirement. As a result, global blast furnace capacity is projected to grow by a net 88 mtpa by 2035.
Coal-based steel production accounts for around 88 per cent of emissions from the steel sector, which itself contributes roughly 11 per cent of global carbon dioxide emissions. Yet the shift toward lower emissions technologies remains slow. Electric Arc Furnace (EAF) steelmaking increased its share of global operating capacity by just one percentage point over the past year, from 33 per cent to 34 per cent. Direct Reduced Iron (DRI) technology represents only 10 per cent of ironmaking capacity globally, and just 2 per cent of operating DRI capacity currently relies on green hydrogen instead of fossil fuels.
Astrid Grigsby-Schulte said the global outlook for steel decarbonisation remains weak. “The ball is in India and China’s court, as the two countries plan 86% of new coal-based capacity,” she said, adding that shifting toward lower emissions technologies and making better use of existing EAF capacity could significantly change the sector’s direction.
India is the largest driver of steelmaking expansion globally, accounting for 42 per cent or 357 mtpa of all steelmaking capacity under development worldwide, nearly three times China’s 112 mtpa. Iran and Vietnam follow with 50 mtpa and 39 mtpa respectively.
More than 60 per cent of new coal-based blast furnace basic oxygen furnace capacity under development globally is located in India. Around 93 per cent of the country’s ironmaking capacity under development relies on coal-based technology. However, only about 5 per cent of this planned capacity has broken ground, leaving substantial room for policy intervention and technology shifts before projects become operational.
India’s steel sector is also facing growing international pressure. The European Union’s Carbon Border Adjustment Mechanism (CBAM), which came into effect in January 2026, imposes a carbon price on imported steel based on embodied emissions. Indian exports could face a 32 per cent increase in costs under the mechanism, pushing some producers to explore lower emissions steelmaking for European markets.
At the same time, foreign investment in coal-based steel production in India continues to rise. Japanese steelmaker JFE Steel Corporation plans to invest $2 billion in India through a coal-based joint venture with JSW Steel, aiming to become the country’s largest foreign steel producer.
India has introduced several policies aimed at reducing emissions in the sector. The Union Ministry of Steel released a green steel roadmap and revised the National Scrap Recycling Policy to gradually increase scrap use in steel production to the global average of 31 per cent. In 2024, India also became the first country to introduce a formal Green Steel Taxonomy, defining green steel as steel produced with emissions below 2.2 tonnes of carbon dioxide equivalent per tonne of finished steel.
However, the report said the threshold remains only slightly below the average emissions intensity of coal-based steelmaking globally, limiting its ability to drive major technological transformation.
India’s dependence on imported metallurgical coal also remains a concern. The country consumes around 77 per cent of the 287 mtpa of iron ore it mines domestically but uses nearly three times the 24 mtpa of metallurgical coal it produces. Continued expansion of coal-based steelmaking could therefore deepen dependence on coal imports and expose the industry to global market volatility.
The report said India still has a major opportunity to pivot toward green hydrogen-based ironmaking and greater use of scrap-based EAF technology before coal-based projects move ahead.
China remains the world’s dominant steel producer and the second-largest developer of coal-based blast furnace capacity after India. The country operates around 60 per cent of existing global blast furnace basic oxygen furnace capacity, making it central to the future emissions trajectory of the steel sector. According to the analysis, nearly 94 per cent of China’s operating blast furnace capacity still has no announced retirement plans, even as the country begins to slow the pace of new coal-based additions.
Although China has expanded Electric Arc Furnace capacity in recent years, blast furnaces continue to dominate its steel production system. The report noted that China and India together account for 86 per cent of all new coal-based steelmaking capacity under development globally, underscoring how decisions taken in the two countries will shape the sector’s global decarbonisation pathway.
Iran has emerged as the third largest centre of steelmaking expansion globally, with around 50 mtpa of capacity under development. Unlike most of the world’s leading steel producers, Iran relies more heavily on Direct Reduced Iron technology rather than blast furnaces. The country has also rapidly expanded Electric Arc Furnace capacity in recent years, adding around 9 mtpa in 2024 alone, according to Global Energy Monitor data. However, fossil fuel dependence remains deeply embedded in Iran’s steel sector because most DRI production is gas based rather than powered by green hydrogen.
Vietnam, with 39 mtpa of steelmaking capacity under development, is also becoming a major growth centre for the global steel industry. The country’s rapid industrialisation and rising construction demand are driving large scale investments in new steel facilities, much of which still relies on conventional coal-based technology. The report warned that continued expansion of blast furnace capacity in emerging Asian economies could lock in high emissions infrastructure for decades unless investment patterns shift toward lower emissions alternatives.
The report said that while China has started to moderate future coal-based steel expansion, India, Iran and Vietnam are continuing to add significant new capacity, raising concerns that global steel emissions could remain elevated well beyond current climate targets.