The future of steel

The international race to green the steel industry is on, but while many European states are championing the necessary transition, the UK is trailing behind.

While the UK government pledged £250 million as part of the Clean Steel Fund ahead of the 2019 general election, funding has yet to be distributed years later, despite our repeated calls on the government to act. The clock is ticking, both with regards to addressing climate breakdown and the need to safeguard a long-term future for UK steel.

The need for immediate action is heightened by sky-rocketing electricity costs faced by the industry, which are currently hampering the competitive edge of UK steel, and the sector’s capacity to decarbonise. Billions in investment is required to transform the UK steel sector and unlock the economic, social and climate benefits that come with it.

In addition to building our steel recycling capacity, this will have to include the greening of primary steel production, to ensure that value chains dependent on access to high grade steel derivatives can remain in Britain. Yet the current lack of capital spending support from the government is holding back the industry’s modernisation process, putting the competitiveness and longevity of the sector and beyond it at risk.

The future of steel is green and while neighbouring European countries forge ahead with the private and government support necessary to transition the industry and align industry emissions with Paris Agreement commitments, the UK is lagging.

Across Europe, the number of green steel initiatives continues to soar as countries grasp the opportunity to modernise and secure a thriving future for the industry. Research published in 2021 by European NGO Bellona identified over 20 primary steel initiatives planned that use hydrogen throughout the continent.

According to the Materials Processing Institute, hydrogen DRI (direct reduction of iron) technology seems ‘the most adapted solution for the UK industry’. There were 14 planned DRI projects at various stages in Europe in 2021. Should steel companies meet their goals, several European countries will have commercial DRI production within the next four years. One country is notably absent from the list of countries investing in this – the UK.

Modernising the steel sector can unlock intertwined social, political and economic benefits for the UK:

• levelling up investment in industrial heartlands;
• securing highly-skilled green jobs for the future;
• stimulating demand for a strategically important sector;
• developing world-leading expertise;
• boosting sustainable exports; and
• creating an ecosystem of UK supply chains.

Moreover, the UK is well placed to create a world-class green steel industry, and cannot reach its net zero targets without transforming the way steel is produced. Policy frameworks and investments in essential components, particularly clean hydrogen production and infrastructures that are key to unlocking green primary steel production, are already being prepared.

It is crucial that steel manufacturers are ready and able to capitalise on these commitments. Seismic opportunities exist should the UK commit to a just plan for near net zero steel emissions:

• steel efficiency improvements;
• investment in green steel R&D;
• co-funding pilot trialling hydrogen-based UK steelmaking; and
• the creation of a clean steel hub to deliver for UK supply chains and the export market.

Progress is sorely needed to secure a long-term future for UK steel, most immediately by tackling excessive energy costs, but with an overarching goal of providing the investment and policies required to transition the sector to a green future.

On its current trajectory, the UK is set to fall further behind European competitors in the development of clean steel, but a window of opportunity exists to turn this predicament around and deliver for the steel sector, steelworkers, and steel communities. The challenge for the UK government now is to grasp this opportunity.

This article is from the autumn 2022 issue of the members’ magazine Your Voice steel and metals.

Read more articles in Your voice in steel and metals.

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