A steam locomotive is about 10% energy efficient. That means that for every 100 shovels of coal that go into the firebox, 90 go up the chimney in the form of combustion products. Compare this with a diesel locomotive, which is about 35% energy efficient.
Steam locomotives are also heavy on water, using up to several thousand gallons per trip. The water once converted into steam is exhausted into the atmosphere where it becomes part of the water cycle. In countries where water is at a premium steam locomotives have often been fitted with condensers which recycle the steam back into the loco’s own water tanks.
That said, a steam train carrying 500 people a given distance is going to create a lot less pollution than an aircraft travelling the same distance or 500 people each driving a car.
The Wiki section on efficiency in the article “Steam Engines” has a good summary on this. (Meaning, relatively good compared to the average Wiki summary.)
Depending on whether the steam engine (the steam motor) is stationary, modern, fitted with “steam reheat”, etc. usable steam engine efficiency varies from almost nothing to 50%. Why “almost nothing”? Well, if that’s all you’ve got, it might be better than nothing, in some situations.
While a steam engine may not be efficient compared to an electric motor — which can easily go over 90% efficiency — consider that the efficiency to produce that electricity needs to be factored in.
Steam engines have significant advantages in low-tech situations, and situations where there’s plenty of cheap fuel. Especially the low-tech steam engines can burn all kinds of fuel: oil, wood, coal … even sugar cane. In fact there are sugar cane fields that use steam locomotives for transportation, since the unneeded parts of the sugar cane plant are right there for the taking.
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