Building momentum for iron and steel decarbonization
Pedal to the Metal is an annual survey of the current and developing global iron and steel plant fleet. The report examines the status of the iron and steel sector compared to global decarbonization roadmaps and corporate and country level net zero pledges.
The data comes from GEM’s Global Steel Plant Tracker (GSPT), an online database of all operating and in development crude iron and steel production plants with a capacity of 0.5 million tonnes per year (mtpa) or more, and the Global Blast Furnace Tracker (GBFT), a worldwide dataset of blast furnace units at iron and steel plants in the Global Steel Plant Tracker.
The global iron and steel industry made major strides towards net zero goals in the last year, with more lower-emissions electric arc furnace (EAF) steelmaking coming online and entering the development pipeline than ever before, according to Global Energy Monitor’s (GEM) annual report on the industry.
The report shows two trends supporting this shift: First, nearly all newly-announced steelmaking capacity follows the EAF production route (93%), which indicates a strong boost in electric arc furnace steelmaking in the years to come.
Second, planned capacity and retirements indicate a transition away from coal-based steelmaking: The global fleet will count an additional 171 million tonnes per annum (mtpa) of higher-emissions basic oxygen furnace (BOF) capacity, 310 mtpa of EAF capacity, and 80 mtpa of capacity with unknown technology.
If these developments and retirements take effect, global operating steel capacity should sit just under the IEA’s net zero-aligned target of 37% EAF steelmaking by 2030, and with heightened momentum the goal is increasingly attainable.
The shift toward a carbon neutral iron and steel industry is multi-pronged and generally involves the replacement of coal-based BF-BOF capacity with hydrogen-DRI or scrap-based EAF production.
Data from Global Energy Monitor’s 2024 Global Steel Plant Tracker and Global Blast Furnace Tracker indicate that, while there has been a notable move toward the lower-emissions direct reduced iron (DRI) and electric arc furnace (EAF) production, blast furnace (BF) development is ongoing and presents a distinct risk for the climate and as stranded assets for top developers.
In 2023, the global iron and steel industry saw progress toward net zero goals, with more electric arc furnace steelmaking coming online and entering the development pipeline than ever before. While more BF-BOF capacity was retired than added last year, new emissions-intensive, coal-based blast furnace capacity coming online and in construction threatens decarbonization targets and risks further entrenching the industry in fossil fuels.
Progress in iron and steelmaking capacity with lower-emissions technologies, but new coal-based capacity poses decarbonization concern
Changes in operating capacity in 2023 by technology type, in million tonnes per year (mtpa)
The transition to greener steel is afoot
The transition toward electric arc furnace steelmaking is underway, but pressure must be maintained all the way through to project completion if real progress is to be seen.
While lower-emissions EAF steelmaking is being announced at record rates, less than 14% of this potential capacity is currently being built. The data show that of all projects that have actually begun construction, nearly 46% are still BOF-based.
Of all 774 mtpa of steelmaking capacity under development, 223 mtpa is in the construction phase. Together, China and India are responsible for 53% of all developments, but especially dominate as developers of coal-based capacity.
India emerged as the top developer of coal-based BOF capacity last year. This year, India’s buildout of BOF capacity has grown so large that it has also replaced China as the top developer of overall steel capacity, even as China remains the top developer of EAF capacity. India is responsible for one-third of total global steelmaking capacity that is announced or under construction (258 mtpa).
Notable shift away from coal-based blast furnaces in new capacity, but carbon lock-in fears persist
Over one-third of ironmaking under development is DRI-based, but DRI must be operated with a green hydrogen reducing agent to achieve net zero production.
DRI made with green hydrogen is a critical piece of the transition as secondary, scrap-based steelmaking via EAF alone is not enough to meet global needs for steel.
DRI makes up 36% of developing global ironmaking capacity with a known production route, compared to only 9% of global operating ironmaking capacity, a notable shift away from coal-based blast furnaces in new capacity. Clear plans for operating DRI capacity with a green hydrogen reducing agent are critical for net zero production.
Carbon lock-in concern continues, with 308 mtpa of new coal-based blast furnace ironmaking capacity under development globally.
While DRI development is on the rise, the majority of operating and developing ironmaking is still blast furnace-based. As carbon-capture and storage fails to perform in the iron and steel industry, new coal-based BF development is increasingly out of alignment with a net zero future. Sixteen countries have new blast furnace capacity under development.
The progress is promising for a green steel transition. Never before has this much lower-emissions steelmaking been in the pipeline. At the same time, the buildout of coal-based capacity is concerning. What the industry needs now is to make these clean development plans a reality, while backing away from coal-based developments
Caitlin Swalec, Program Director for Heavy Industry at Global Energy Monitor
As the largest operators and developers of coal-based BF capacity, BF operations and development in China and India are key to understanding global iron and steel production in a net zero future.
Despite little change in total operating and construction BF capacity in China since GEM’s 2023 data release, a closer look at announcement and construction dates shows that new blast furnace development is still strong in China, with 32 mtpa of BF capacity entering construction in 2023.
While India has more BF capacity announced, China has more BF capacity that has progressed into the construction stage.
How does steel and ironmaking capacity break down by country?
Of the operating capacity with a known production route, 1,483 mtpa (68%) uses BOF technology, 701 mtpa (32%) uses EAF.
Asia operates over two-thirds (68%) of all steelmaking capacity, the majority of which is in China (1,075 mtpa) and India (123 mtpa), followed by Japan (109 mtpa). The United States also has 109 mtpa in steelmaking capacity.
Of global operating ironmaking capacity with a known production route, 91% is coal-based blast furnace (BF) and 9% is direct reduced iron (DRI).
Asia continues to lead in operating BF capacity, with 61% of global operating BF capacity found in China, and India a distant second with 7% of global operating BF capacity.
Explore below to find out how operating and developing steel and iron capacity breaks down by status and technology type in a number of different key countries.
