Methane from coal mining is a blind spot in steel’s climate impact

Methane emissions from coking coal extraction have a significant impact on global warming, but have not been proportionally reflected in steelmakers’ mandatory emissions reporting.

Steel is a critical material to modern society. As urbanisation, population and economic growth drive demand, steel production volumes are expected to rise further to support the global energy transition and future infrastructure development.

Since 2015, around 1.8 billion tonnes of crude steel are produced annually, contributing around 2.8 gigatonnes – or 8% – of global direct CO2 emissions per year. To meet net zero targets, the iron and steel industry must undergo a major transformation by combining various decarbonisation pathways, from maximising recycled steel production powered by renewables to scaling up green hydrogen-based technologies to achieve near zero-emission production.  

Globally, around 70% of crude steel is still made with iron produced in blast furnaces powered by coal-derived coke. While more low- and near-zero emissions projects have been announced in recent years, there is still a gap between what is in the current projects pipeline, and what is required to meet the Net Zero Emissions Scenario. 

In the meantime, direct CO2 emissions – Scope 1 and 2 – from the iron and steel sector remain stubbornly high. To accelerate substantial and actual reductions in the near term, steelmakers need to actively decarbonise their supply chains. In particular, fugitive methane emissions from coking coal extraction – driven by projected steel demand – need to be accounted for and addressed.

Metallurgical coal (or met coal) refers to a group of coal products used to make metal. It comprises several grades of coal such as coking coal, coal for PCI and coal for ferroalloys metallurgy. The core distinction between ‘met coal’ and ‘thermal coal’ is the purpose for which they are used.

Due to frequent gaps in public data, it was often not easy to distinguish between coal types used by the steel industry. In this report, we use “metallurgical coal” to refer to “coking coal and PCI coal”. Details can be found in the Methodology section. The data insufficiency underscores the need for more detailed and transparent reporting of coal type in trade and emissions data to enable accurate climate assessments.

The iron and steel industry uses various grades of coal, usually grouped under the broader term “metallurgical coal” or “met coal”. Among them, coking coal is a high-grade bituminous coal used to produce coke, which is suitable for blast furnace ironmaking. 

The majority of metallurgical coal is used in blast furnaces, with coking coal accounting for around three quarters of the steel industry’s coal usage. Usually, a mixture of multiple coking coal qualities are used to ensure that coke meets chemical specifications. 

Depending on the operating efficiency of the facility and the quality of coal, producing one tonne of crude steel requires an average of 780 kg of coking coal. Additionally, to a certain extent, pulverised bituminous coal (also known as PCI coal) can be directly injected into blast furnaces to supplement coke usage. 

Coking coal is concentrated in a few countries due to specific geological and chemical conditions. But this also means that methane – a potent greenhouse gas – is released into the atmosphere when coal seams are mined.

Pulverised Coal Injection (PCI)

Pulverised coal injection (PCI) is a technology used to reduce the reliance on coke and improve blast furnace operation. PCI coal is essentially high-quality steam coal that can be sold into metallurgical or thermal coal markets. One tonne of PCI coal used for steel production displaces about 1.4 tonnes of coking coal. Most blast furnaces operate at a ratio of 60-70% coke and 30-40% PCI coal.

Each year, around 1.8 billion tonnes of crude steel is produced worldwide. Most of this relies on 1.3 billion tonnes of pig iron processed through coal-based blast furnaces. 

The global steel industry is estimated to use around one billion tonnes of coal annually, making the iron and steel industry the dominant consumer – around 75% – of global coking coal. 

Australia is a major coking coal supplier

Between 2019 and 2023, global coking coal production averaged 1.05 billion tonnes per year. The largest producers were China (52.2%), Australia (16.8%), Russia (9.4%), the United States (5.4%) and India (5.3%).

While China’s production is used domestically, Australia is a net exporter and supplies over half of the global seaborne coking coal market. This is also reflected in the import profiles of major steel-producing economies, despite their efforts to diversify sourcing.

Although India is a major importer of Australian coking coal, the accurate attribution of coal mine-to-steel plants in the country could not be clearly determined due to data insufficiency. Considering the differences in data granularity, this analysis focuses on imports by the EU, Japan and South Korea where reliable mine-to-steel plants data are available.

Coking coal has a methane problem

Coal mining releases methane – a powerful greenhouse gas with a far greater global warming potential than carbon dioxide, being over 80 times more potent per tonne over 20 years and around 30 times more potent over 100 years.

Methane is stored within coal seams and surrounding rock formations. When these seams are disturbed during mining, methane escapes into the atmosphere. In some cases, emissions continue for years even after a mine has closed.

Methane emissions vary based on geological and mining conditions. Generally, coking coal has higher methane intensity than thermal coal. This is because coking coal is often mined from deeper underground seams – which is associated with more methane being stored in the coal.

Global Warming Potential (GWP)

Global warming potential (GWP) is a measure to express the effects of GHGs in CO2 equivalent terms. Given that methane absorbs much more energy when in the atmosphere, but has a shorter lifetime than CO2, the IPCC considers its impact over 20 years (GWP20 = 82.5) and over 100 years (GWP100 = 29.8).

The GWP100 value has been used by Governments and in major international agreements on the basis that global warming is a long term challenge. At Ember, we propose to use GWP20, as methane’s short atmospheric lifetime means emissions reductions can reduce global heating in the near term.

According to the IEA, coking coal mining in Australia emitted approximately 867 kilotonnes (kt) of methane in 2024. Using the IPCC’s 20-year global warming potential (GWP20) of 82.5, this equals roughly 71.5 million tonnes (Mt) of CO2-equivalent emissions annually — approximately double the total CO2e emissions of some countries like Denmark or New Zealand in 2021 (31.6 Mt and 34.3 Mt respectively).

This also means that methane emissions from coking coal mining exceed those from the thermal coal sector and are more than twice the combined methane emissions from Australia’s oil, LNG and gas pipeline infrastructure (368 kt).

Methane emissions from Australian coal mines are consistently underreported

Previous analysis by Ember found that coal mine methane emissions could be twice as high as reported by governments globally, with estimates ranging between 38 and 67 Mt of methane per year. 

This gap exists because many governments do not directly measure methane emissions from coal mining. The lack of monitoring is a particular issue for surface mines. Rather than measuring methane emissions, operators estimate them using standardised emission factors, without independent verification of the actual methane released. 

Australia is a key example. International and satellite data estimates have consistently shown that Australia significantly underreports its coal mine methane emissions. A major reason for this could be the increasing share of open-cut mining, which now accounts for over 85% of Australian coal production. 

Building on this, Ember’s analysis of six of Australia’s key coal regions during 2020-2021 found actual methane levels to be at least 40% higher than officially reported. 

Given that the country supplies over half of the global seaborne coking coal market, stakeholders in the steel industry should be aware of the associated climate risks. 

IEA estimates higher methane intensity than reported by coal mines

Ember analysed coal mine data reported under Australia’s Safeguard Mechanism in FY2024 and found that metallurgical coal (coking coal and PCI coal) had an average methane emission factor of 3 tonnes of methane per kilotonne of coal. In contrast, for thermal coal, the average was 1 tonne of methane per kilotonne of coal.

The IEA however estimates that Australia’s coking coal emits on average 5.2 tonnes of methane per kilotonne of coal, compared to 3.6 tonnes per kilotonne for thermal coal.

When factoring in both IEA and Safeguard Mechanism data, methane emissions from Australian coking coal add an estimated 0.2 to 0.3 tCO2e per tonne of steel (based on GWP20). This means that the methane emitted during mining of coking coal for blast furnace steel production adds an estimated 10 to 17% to steel’s emission intensity.

Australia’s gassiest coal mines double the emission intensity of steel made from the blast furnace route

Data reported under the Safeguard Mechanism also reveals wide variation in methane intensity across coal mines. Ember analysis finds that, depending on where the coal is sourced, fugitive coal mine methane emissions can add anywhere from 0 to 140%, to steel’s short-term climate impact. At the upper end, coal from the gassiest mines could more than double the climate footprint of steel produced via the blast furnace route.

Most of these emissions come from underground metallurgical coal mines, which make up eight of the ten gassiest mines in Australia. These eight mines account for more than a fifth of reported emissions under the Safeguard Mechanism, whilst representing just 3% of total reported coal production.

Cutting coal mine methane emissions is both technically feasible and economically viable. The IEA estimates that a total 45% (388 kt) of methane emissions from metallurgical coal mines in Australia could be abated using existing methods, including capture and utilisation as well as VAM (Ventilation Air Methane) oxidation. 38% (333 kt) of total emissions could be cut at a cost lower than the market price of Australian Carbon Credit Units (ACCUs), making them cost-effective to address.

The average cost of mitigating these emissions is less than $14.6 USD per tonne of CO2e. Given the low-cost and high-impact nature of targeting coal mine methane emissions, such abatement represents a clear low-hanging fruit for emissions reductions.