India Faces 1.2 Trillion Dollar Coal Import Risk from Planned Steel Expansion

India's planned expansion of steelmaking capacity could lock the country into nearly 1.2 trillion US dollars in coking coal imports and 19.5 gigatonnes of carbon dioxide emissions over the next 40 years, according to a new report by the India Energy and Climate Center at the University of California, Berkeley. The report argues that green hydrogen-based steel production offers a more resilient and lower-carbon alternative.

India, the world's second largest crude steel producer with 149 million tonnes of output in 2024, plans to expand installed steelmaking capacity to 300 million tonnes by 2030-31 from around 200 million tonnes in 2025. Around 60 to 65 per cent of the proposed new capacity is expected to use the conventional blast furnace basic oxygen furnace route, which is entirely dependent on imported coking coal. Over 90 per cent of India's current coking coal demand is already met through imports, exposing the sector to significant price and supply chain risk.

The IECC analysis found that green hydrogen-based steel production is projected to become cost competitive by 2030, which coincides with the timeframe over which India's blast furnace investment decisions are being made. Locking in coal-dependent capacity now would create stranded asset risk and foreclose the cost savings associated with cleaner production routes. The report frames this not merely as a climate issue but as a long-term economic and energy security concern for India's industrial competitiveness.

The steel sector contributes roughly 11 per cent of global CO2 emissions, and India's expanding share of global production makes its decarbonisation pathway increasingly important to international climate targets. Policymakers and industry leaders are being urged to align steel capacity planning with India's broader climate commitments and to take advantage of the declining cost of green hydrogen technologies. Incentives for early adoption of electric arc furnace and direct reduced iron technologies could help redirect investment away from high-carbon blast furnace expansion.

Key figure — $1.2 trillion in coking coal imports over 40 years