Why Methane Matters for Steel
The global steel sector depends heavily on coking coal in steelmaking. Most steel is still produced in blast furnace steel climate impact systems that rely on coal as both fuel and a chemical reducing agent. But while carbon dioxide (CO₂) is often reported, the powerful greenhouse gas methane is still missing in most climate accounts.
Methane is over 80 times more warming than CO₂ in the first 20 years after release. According to Ember, methane from Australian coal mines can add 10-17% to steel’s short-term climate footprint. This hidden factor could reshape how steel companies and policymakers view the industry’s path to net zero.
Australia’s Role in Global Coal Supply
Australia is the world’s largest exporter of coking coal. It supplies coking coal to more than half of the global market. This makes australian coking coal emissions a critical part of steel’s climate challenge. In 2024 alone, Australia’s coal mines emitted around 867 kt of total methane, which is twice as much as its entire oil and gas sector. This level of methane leakage raises big questions for international buyers who rely on Australian coal to fuel their furnaces.
The Problem of Underreporting
One of the biggest barriers to climate action is poor reporting. Study based on the monitoring via satellites and aircraft indicated that methane emissions from coal mines in Australia could be between three and eight times the amounts reported in the official data. This raises concerns and adds challenges in tackling climate change.
One of the most significant examples is the Hail Creek mine in Queensland which exported 4.3 Mt of coal in 2023-24 to companies like ArcelorMittal and Nippon Steel and reported about 12.9 kt methane. Study suggest's actual emissions maybe likely closer to 40 kt methane. This is equivalent to emissions from 283,000 cattle in one year.
Such gaps mean steelmakers are importing coal without knowing its true steel industry scope 3 emissions.
Steelmakers’ Hidden Supply Chain Risks
Ember’s analysis shows that including upstream methane in Scope 3 emissions would raise the footprints of major companies:
- ArcelorMittal: +6%
- Nippon Steel: +10%
- POSCO: +15%
This means that decarbonising steel supply chains is impossible unless coal methane is addressed at the mine level. Coal mine methane falls under Scope 3 Category 1 (Purchased Goods & Services), yet most steelmakers do not disclose it.
The Impact of Super-Emitting Mines
Not all mines are equal. Eight of the ten gassiest mines in Australia are metallurgical coal mines. These account for 20% of methane emissions but only 3% of coal production. In such cases, metallurgical coal methane impact can actually double the short-term warming of steel production.
This creates two major risks:
- Misleading reporting : Steel companies underestimate their footprint.
- Market exposure : Investors face hidden liabilities if regulations tighten.
Cutting Methane Before 2030 - A Quick Win
Unlike CO₂, methane can be reduced quickly with proven technology. Studies show that more than half of coal mine methane emissions are avoidable with existing solutions.
Available measures include:
- Flaring or oxidising methane from mine ventilation air.
- Using VAMTOX systems that destroy methane at 98% efficiency.
- Installing continuous monitoring to track emissions.
These solutions make coal mine methane reduction technologies a critical step for steelmakers who want to act before 2030.
Long-Term Transition: Beyond Coal
Short-term methane cuts are only part of the solution. The long-term goal is to replace coal altogether. Several pathways are being developed such as electric arc furnaces (EAFs) powered by renewable energy, a Hydrogen-based direct reduction of iron (DRI) or the HIsarna process, which reduces coal use and emissions.
Together, these technologies offer a path to net zero by 2050, but they need time, investment, and global cooperation. Until then, tackling methane in coal extraction remains urgent.
Policy and Industry Recommendations
To address the problem effectively:
For Steelmakers:
- Include steel industry scope 3 emissions from coal methane in reporting.
- Demand transparency from suppliers in mining industry australia.
- Set clear targets for methane reduction in supply chains.
For Policymakers:
- Strengthen reporting rules for coal mining in Australia.
- incentivise methane abatement at the mine level.
- Integrate methane into steel sector decarbonisation policies.
Key Facts at a Glance
| Issue | Data | Why It Matters |
|---|---|---|
| Methane intensity | 3-5 tonnes per kilotonne of coal | Raises steel’s 20-year climate impact by up to 17% |
| Super-emitters | 8/10 gassiest mines are metallurgical | Can double blast furnace emissions |
| Underreporting | Actual methane often 3-8× higher | Steel companies underestimate emissions |
| Global role | Australia supplies 50% of coking coal | Buyers face hidden climate costs |
| Solutions | Over half of methane is avoidable | Cheap and fast win before 2030 |
Methane from australia coal exports steel industry is one of the most urgent blind spots in global climate policy. Without addressing it, steel’s path to net zero will remain delayed.
By acting now, through better reporting, abatement technologies, and supply chain accountability the steelmakers can reduce hidden risks while preparing for the long-term transition away from coal.