A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) found that India’s leading steelmakers are falling behind on the investments and operational changes needed to meet their own decarbonisation goals. The report titled “Indian steelmakers must match ambition with action on decarbonisation” warned that delayed action could lock the sector into decades of high emissions.
India is the world’s second-largest steel producer in the world. It is also expected to play a decisive role in the future of global steel emissions as domestic demand continues to rise while growth plateaus in Europe, Japan, and China. The country aims to expand steelmaking capacity to $300 million tonnes by 2030.
Indian Steel Industry Emissions Higher Than the Global Average
India’s steel industry remains one of the most carbon-intensive industries, globally. It emits 2.54 tonnes of carbon dioxide per tonne of crude steel, around 38% higher than the global average, according to the report.
The report said that the Indian steel sector has embraced climate targets that align with the Paris Agreement. However, this ambition is not matched by corresponding progress in building the operational, technological, and financial infrastructure required. The sector also faces a critical timeframe over the next decade, in which decisions by companies, investors and the government will determine the prospects for steel decarbonisation in India.
Indian Steelmakers’ Capital Allocation For Decarbonisation Remains Weak
The report evaluated seven Indian steelmakers and three global peers assessing the connection between their stated emission reduction targets and their actions in terms of strategic planning, operational capabilities, and financial alignment. The Indian companies assessed include JSW Steel, Tata Steel, Steel Authority of India Limited (SAIL), Jindal Steel, Rashtriya Ispat Nigam Limited (RINL), Jindal Stainless Limited, and Godawari Power and Ispat Limited (GPIL), while the global companies are ArcelorMittal, POSCO, and Nippon Steel.
While five of seven Indian companies have adopted Paris Agreement aligned net-zero targets for 2050, two decades ahead of India’s national 2070 commitment, the report found that implementation lagged behind the ambition. The report found the financial alignment as the weakest across the sector. None of the companies scored above 43%, indicating that capital allocation and alignment decisions across the sector have not kept up with stated climate strategies.
“Companies have set targets, and technology planning is advancing among the leaders, but capital allocation has not moved,” says Soni Tiwari, Energy Finance Analyst, South Asia at IEEFA. “Meanwhile, emissions are heading in the wrong direction, and that problem is set to worsen as the sector grows unless technology substitution accelerates.”
India at Growing Carbon Lock-In Risk
The report also warned of the growing carbon lock-in risk, which means that the sector is at risk of getting stuck with the highest emission infrastructure for decades because of the long term investments made today. In India, around 43 million tonnes per annum (MTPA) of existing BF capacity is due for relining before 2030, which would allow these furnaces to continue operating for an additional 15–20 years.
The report emphasised that overcoming these challenges demands coordinated government action. Globally, approximately $24 billion in investments in steel decarbonisation has been facilitated by public capital highlighting a fundamental truth that the economics of green steel currently lack sufficient public support.
The report stated that for India, targeted public capital deployment through instruments like credit guarantee facilities, competitive contracts for difference, and green public procurement mandates will be essential. These measures will shift the risk-reward balance for producers and unlock private investment on a larger scale.