Indonesia’s steel industry is rapidly becoming a major source of greenhouse gas emissions, despite receiving less attention than other polluting sectors like palm oil and coal mining. A recent report by the environmental NGO Action for Ecology and People’s Emancipation (AEER) indicates the industry is already one of the country’s largest industrial emitters and is poised to become significantly more polluting if current trends continue.
Rising Demand, Rising Emissions
Driven by global demand for steel—fueled by the growth of electric vehicles, renewable energy projects, and infrastructure development—Indonesia’s crude steel production reached approximately 16.8 million metric tons in 2023, making it the world’s 15th-largest steel producer, according to the World Steel Association. AEER estimates that output could increase twelvefold by 2060, with a corresponding 11.7-fold rise in emissions if coal-based production methods remain dominant.
At this scale, steel production alone could account for around 31 per cent of Indonesia’s total greenhouse gas emissions by 2060, potentially jeopardizing the nation’s net-zero targets. The industry’s high emissions are largely attributed to its reliance on coal-based blast furnace steelmaking, a process that utilizes coal both as a chemical input and a heat source.
A Carbon-Intensive Process
According to AEER researcher Timotius Rafael, “The steel industry is one of the largest emitters within the industrial sector, making it a top priority for decarbonisation. Steelmaking processes require extremely high temperatures, resulting in very high emissions.” Currently, approximately 80 per cent of Indonesia’s steel is produced using blast furnace-basic oxygen furnace (BF-BOF) technology, the most carbon-intensive method. Electric arc furnaces (EAF), a cleaner alternative, account for only around 20 per cent of production, limited by factors like scrap metal availability and reliance on carbon-intensive electricity.
Indonesia’s steel emissions intensity is estimated at 1.6 tons of CO₂ per ton of steel, classifying it as a high-carbon producer under emerging global benchmarks.
Government Response and Policy Gaps
The Indonesian government acknowledges the risks associated with rising steel emissions. Industry Minister Agus Gumiwang Kartasasmita stated in October 2023 that the steel sector should lead industrial decarbonisation efforts and achieve net-zero emissions by 2050, asserting that “The steel industry has to become an example in embracing sustainability principles and playing an active role in minimising environmental impact.” The government has implemented policies including the 2025-29 midterm development plan, a carbon pricing regulation, and an industrial decarbonisation road map.
However, AEER’s analysis reveals that these policies lack binding sector-specific emissions targets, clear timelines for transition, and robust enforcement mechanisms. This allows for continued expansion of high-emissions steel production, even as export markets increasingly demand lower-carbon steel. The Ministry of Industry maintains its approach prioritizes improving emissions data and reducing intensity before implementing sector-specific limits.
Health and Environmental Impacts
The environmental impact extends beyond climate change. Steelmaking releases hazardous air pollutants—including particulate matter, nitrogen dioxide, and sulfur dioxide—linked to respiratory and cardiovascular disease. Residents near steel clusters in Cilegon, Banten, and Morowali, Central Sulawesi, experience chronic air pollution and rising rates of illness. For example, cases of acute respiratory infection (ARI) in Tegal Ratu, a neighborhood adjacent to steel facilities, rose from 665 in 2023 to 1,065 in 2024. AEER also connects steel-driven development to environmental degradation, including flooding and loss of natural drainage systems.
Frequently Asked Questions
What is driving the growth of Indonesia’s steel industry?
Global demand for steel is rising, driven by the expansion of electric vehicles, renewable energy, and infrastructure projects.
What is the primary source of emissions from Indonesian steel production?
Indonesia’s high emissions stem largely from its reliance on coal-based blast furnace steelmaking, which uses coal both as a chemical input and as a source of heat.
What steps is the Indonesian government taking to address emissions from the steel industry?
The government has rolled out policy frameworks including the 2025-29 midterm development plan, a carbon pricing regulation issued in 2025 and an industrial decarbonisation road map, but AEER finds these lack binding targets.
As Indonesia’s steel industry continues to expand, will the country be able to balance economic growth with its commitment to reducing greenhouse gas emissions and protecting public health?
