Indonesia’s rapidly expanding steel industry could derail the country’s climate goals by 2060

Indonesia’s steel industry is quietly becoming an environmental powerhouse—but not in a good way. While sectors like palm oil and coal mining dominate headlines about the country’s carbon footprint, steel production is rapidly emerging as one of Indonesia’s fastest-growing sources of greenhouse gas emissions, according to a new report from environmental group Action for Ecology and People’s Emancipation (AEER).

The numbers tell a striking story. Indonesia already ranks as the world’s 15th-largest steel producer, churning out 16.8 million metric tons in 2023. But that’s just the beginning. Driven by surging global demand for electric vehicles, renewable energy infrastructure, and construction projects, AEER projects that Indonesia’s steel output could explode twelvefold by 2060. If the industry continues its current coal-heavy approach, emissions would skyrocket 11.7 times from today’s levels.

The implications are staggering: steel production alone could account for nearly one-third of Indonesia’s total greenhouse gas emissions by 2060, potentially making the country’s net-zero commitments impossible to achieve. The culprit is Indonesia’s reliance on coal-based blast furnace steelmaking, which burns coal both as fuel for the extreme heat needed to melt iron ore and as a chemical ingredient in the process itself.

“The steel industry is one of the largest emitters within the industrial sector, making it a top priority for decarbonization,” notes AEER researcher Timotius Rafael. As Indonesia races to meet growing steel demand, the question becomes whether it can transform its production methods quickly enough to avoid a climate catastrophe.