UK is falling behind EU rivals in race for green steel, warns climate group

tuesday 07 march 2023 7h00

The steel industry has received major subsidies, but so far has not been pressured to decarbonize

The UK is falling further behind its European rivals in the race to develop green steelworks, according to a leading climate advisory group.

The latest report from the Energy Climate and Intelligence Unit reveals that the UK has just one green steel project planned, compared to 38 in the European Union.

Meanwhile, ten factories on the mainland have already started producing green steel.

The data shows developments have barely improved since 2021, when the issue was already researched, when the UK had no projects planned compared to 23 planned in the EU.

The only project planned in the UK is at British Steel’s Scunthorpe plant – which is part of the Zero Carbon Humber initiative.

The plant would use blue hydrogen, which is produced from gas through a process called steam methane reforming combined with carbon capture and storage to capture some, but not all, of the carbon emissions later.

By contrast, the majority of EU projects use green hydrogen, which is produced by electrolysis from renewable electricity, producing zero emissions.

Over the past two years, the number of planned green hydrogen steel projects has doubled with ten clean steel plants planned in Germany, nine of which are based on green hydrogen.

The government is said to be in talks with the steel industry about a support scheme that would help it switch to greener technologies, but no stipulation has been included for electric arc furnaces or green steel in its agreed bailout package for British Steel.

Environmental think tank Green Alliance last month urged the government to introduce tough emissions targets for industry’s announced £600m bailout.

Green steel has become an increasingly important factor in the push to net zero – with the metal essential for infrastructure development and economic growth.

Several companies, including offshore wind giant Orsted and automaker Volvo, have become signatories to the Steel Zero initiative – publicly committing to buy and use 50% low-emission steel by the end of the decade, paving the way for 100% net zero steel use by 2050.

Volvo is now aiming to sell only electric cars by 2030, while Ford has signed an agreement with the Dutch branch of Tata Steel to supply green steel.

ECIU energy analyst Jess Ralston called on the government to draw up green steel plans ahead of this month’s budget.

She said: “With carmakers starting to look for sources of green steel to support their electric vehicle expansions, will the UK be able to compete? The gas crisis has prompted the United States and the EU to create green industries. Does the Chancellor have something up his sleeve to ensure the UK doesn’t fall further behind on steel? »

The lack of progress has also drawn criticism from within the Conservative Party.

Jo Gideon, Conservative MP and member of the Conservative Environment Network, championing the environment, called on the government to do more to encourage steel producers to go green.

Gideon said City MA:. “Steel is at the heart of our industrial heritage and our net zero future. Green steel demand is expected to increase significantly due to net zero commitments. We should give UK steel producers more support to capture part of this market and maintain their long-term competitiveness.

“The Treasury should also publish firm proposals for a carbon border adjustment mechanism, so that imports of higher carbon steel cannot undermine UK producers of green steel.”

Asked for comment, a government spokesperson said: “We are fully committed to ensuring a sustainable future for the UK steel sector – with funding packages worth over £1.5billion to help sectors like steel to reduce emissions and become more energy efficient.

“We are developing carbon capture and hydrogen production in the UK, including providing financial support, as a leading option to decarbonise industrial processes, including steel.”

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