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HomeLow carbon futureIt’s do or die for the UK steel industry

It’s do or die for the UK steel industry

The new cabinet this autumn would be wise not to ignore one of the country’s most strategically important sectors: the steel industry. Last year’s Industrial Decarbonisation Strategy, and talks by the industry and government in the Steel Council, set up good early momentum to modernise the industry. But, since, the pace of change has slowed considerably.

Last week’s ‘week of steel’ saw the publication of three reports, from Green Alliance, Bright Blue and UK Steel, all highlighting the need to shift faster to a clean steel future.

These reports could not be timelier as they stress that, without urgent action, the UK risks losing out to global competition or, at worst, losing its iconic steel industry altogether.

Clean steel will soon be the only steel
Historically, steel has been one of the most polluting materials to make (generating around two tonnes of CO2 for every tonne of virgin steel produced), but new technologies are quickly changing this. As the green economy grows there is increasing demand for near zero emission steel. Soon it will be the only steel in town.

In the UK, conventional blast furnace steel production is responsible for 14 per cent of industrial emissions. As Frank Aaskov, the author of UK Steel’s report, put it: “In 2050, either we have a decarbonised steel sector or we have no steel sector at all”. If the UK takes decisive action now, it could emerge as a world leader in this industry once again, with wider benefits for the economy and levelling up the country.

But will we really need steel in future? Other materials, such as cross laminated timber and aluminium can replace it in certain applications. However, steel remains an essential material for, amongst other things, important green tech. For example, 88 per cent of a wind turbine is steel.  For homegrown clean steel the UK needs a plan.

Nearly 90 per cent emissions reduction is possible
In our report we show that phasing out blast furnaces and rapidly expanding electric arc furnace steelmaking using recycled scrap metal, alongside hydrogen direct reduction for virgin steel, could cut emissions 87 per cent by 2035. In line with what government adviser the CCC is suggesting, it would put the UK in the same ball park as other global leaders, such as Sweden, in being able to exploit growing global demand for clean steel.

The benefits of low carbon steel are clear. Besides increasing productivity and new private investment, it would help to safeguard the industry’s future, along with all the other sectors that rely on it, while supporting tens of thousands of well paid jobs in traditional industrial regions, like South Wales and Yorkshire.

The UK has ample scrap steel reserves to support this strategy, enabling a shift towards a more circular, self-sufficient industry, which should be a priority following the disruption to global supply chains and rise in energy costs caused by the war in Ukraine.

Progress towards decarbonised steel across Europe shows that it will only happen with strong collaboration between government and industry. Critically, for the UK, this means creating a supportive policy and business environment to attract investment.

As last week’s reports all highlighted, there’s an urgent need to address sky high industrial electricity prices, fix the market for high quality domestic scrap steel as an input (most of it is currently exported) and ensure UK producers are not being undercut by high carbon imports.

Given its importance as a source of jobs in red wall constituencies, the prospects of this industry could very well be tied up with the prospects of politicians at the next general election, so it will be important to pay attention to it now. There can be no UK net zero carbon economy without clean steel.

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Written by

Verner is a policy analyst at Green Alliance.

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