Going green
So what can be done to make Britain’s steelmakers viable again in the face of so many global headwinds?
Firstly, the UK needs to reinvent itself as the home of low-carbon steel – a goal that the government is already supporting to some degree. Aided by a recent £500m taxpayer injection, Port Talbot is undergoing the process of installing an electric arc furnace (EAF) – a technology that allows steel to be produced with electricity instead of coking coal. Assuming the EAF is entirely powered by renewable energy – an increasingly likely assumption if Labour’s 2035 grid decarbonisation plans come to pass – Britain could become a major producer of low-carbon steel.
This will also have the side effect of helping the UK meet its climate goals. Port Talbot, for example, is currently the UK’s largest carbon emitter, and transitioning to an EAF there would reduce the UK’s entire carbon emissions by 1.5%.
Meanwhile, the broader process of decarbonisation itself will require vast amounts of steel to build the wind turbines and electricity infrastructure needed to create the zero-carbon grid. While British steelmakers may not be able to compete on price, they could reinvent themselves as low-carbon producers, providing a vital material for any construction project claiming to have reduced its environmental impact. China has not been ignoring EAF technology either, and indeed currently operates around 22% of the world’s capacity. However, the carbon cost of transporting the material to Europe gives UK-made steel an inherent edge, both at home and on the continent.
The UK also needs to consider the domestic demand. It has been estimated that 10 million tonnes of steel will be needed over the coming years for renewable energy production, across wind, solar, nuclear and more. On a national scale, one would think that the economic and security benefits of keeping the UK’s steel sector alive should be enough to outweigh the price differences from outside manufacturers.
HS2, for example, sourced some domestic steel but also leaned on a host of European and Turkish producers. This irked the Unite union here, which called on the government to mandate a certain proportion of UK steel be used in the project. While this could result in some minor cost increases for HS2, the economic impact of losing the UK’s steel sector entirely would be harshly felt, and preserving it should be considered a price worth paying.
