I was reading some old quora/stackexchange threads with similar question and apparently lack of fossil fuel implies lack of limestones, which would affect the world quite a lot. Coupled to a few replies I received here that it would not stop industrialization, I'm thinking the premise is pointless and only serves to add an extra layer of complications.
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Originally Posted by Rupert
Well, once you have enough power, you can make liquid fuels from biomass, allowing for more portable steam engines and also internal combustion engines.
Steam engines don't imply steampunk. Steam was common in ships until after WWII, and it's still how coal powerplants turn the coal into electricity (and nuclear powerplants are steam engines).
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Regardless of existence of fossil fuel, I think you make a good point. The Mana Engines I mentioned before could be, say, a steam engine powered by fire magic/elemental instead of coal. Given how technological knowledge from Earth are introduced, mana engines like above could be the alternate path taken by Yrth after acquiring steam engines while in real world people are slowly developing ICE.
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Originally Posted by copeab
Two problems magic may not be able to help are cookoffs and extracting a dud in a self-loading or automatic weapon.
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Combat II has Essential Gunpowder which could be interpreted as helping with those problems, but I guess it would add significant cost.