UK Steel welcomes climate funding

The British Government is to spend an estimated £250 million on cleaning up the steel industry, according to a number of online media reports.

The aim of the expenditure is to gun for zero greenhouse gas (GHG) emissions by 2050 and there are also plans to encourage business to match the funding and support other methods of reducing emissions, such as industrial carbon capture and alternative fuels, such as biomass.

According to Reuters, a total of £390 million will be available, £250 million of which will come from the Clean Steel Fund, and a further £100 million to develop the production of hydrogen, which emits no GHGs when burned.

Gareth Stace, director-general of UK Steel, said the Clean Steel Fund was 'extremely positive news' for UK steelmakers and the whole of the UK's decarbonisation efforts. He added that the fund was a vital step towards further reducing 'our carbon footprint' in the UK and 'will cement our position in a future low-carbon world'.

“Recent years’ Government policy of carbon taxation and renewables funding has added costs to steel production through higher energy bills," said Stace. "As steel is an intensively traded product, this has had a negative impact on the sector’s competitiveness and leads to fears that we are exporting steel production, its jobs, and emissions, rather than lowering emissions at home.

“It is crucial that the Clean Steel Fund is designed in a manner that can be best used by the steel sector and make maximum use of funds allowed by state aid. This is not a time to be too cautious, as UK steelmakers face an uncertain business environment. The Government needs to move swiftly to secure a bright future for the sector while addressing the elements which undermine our competitiveness.”

There are a number of important facts that readers need to know regarding the price of energy for UK steelmakers. In a report entitled The Energy Price Scandal, published in December 2018, it was pointed out that:-

1. UK steel producers pay twice as much for electricity as their competitors in France and 50% more than in Germany.

2.The electricity price disparity between German and UK power prices faced by steelmakers has increased from £18/MWh in 2017/18 to £22/MWh in 2018/19; and between French and UK power prices from £17/MWh in 2017/18 to £34/MWh in 2018/19.

3. The difference between German and UK electricity costs is the equivalent of £55 million a year to the sector.

4. Consistently higher UK electricity prices deter investment, ultimately endangering UK steel production and jobs.

5. Achieving parity with Germany could deliver a £55 million investment in the sector, a 30% increase in capital investment.