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How can the UK steel industry stay relevant? It must decarbonise

9 March 2023, 11:32 UTC 4 min read

Jen Carson, Head of Industry

The UK steel industry is negotiating its future. Talks with the UK government on a new financial support package are ongoing. It’s crucial the funding requirements drive rapid decarbonisation within a set timeframe. This is not only an urgent priority for addressing climate change, but also necessary for the industry to stay internationally competitive in a future zero-carbon economy.

It’s time to grasp the opportunities

For the UK government to meet its legally binding net zero pledge it must catalyse steel industry decarbonisation. With some of its recent decisions in direct conflict to this target, the UK government must reaffirm a progressive stance on carbon emissions. It must provide strong financial and regulatory support, to help get the UK steel industry to net zero. And if it does, it’ll join the group of forerunners that are already grasping the rapidly growing market opportunties for responsibly produced steel.

The EU and the Swedish government are already ahead of the curve. Separately both institutions have provided funding to Sweden’s HYBRIT steel plant, which in 2021 produced the world’s first fossil fuel free steel pellets. This operation was established by steelmaker SSAB, iron ore producer LKAB and energy firm Vattenfall and is set to deliver low emission steel to the market by 2026. Businesses are already buying its product. Volvo Cars has secured steel made at the plant for potential use in its cars and Volvo Group has already unveiled its first vehicle made using HYBRIT’s product.

The demand is rapidly growing

We know that there’s already a clear demand for responsibly produced steel in the UK. Two thirds of our SteelZero members are UK businesses. They’re committed to buying and using 50% low emission steel by 2030 and 100% net zero steel by 2050. Together, through their SteelZero commitment, they send a strong signal to the market that there’s a demand for responsibly produced steel here in the UK.

The UK government can walk in the fresh footsteps of the Swedish government and become a front runner in net zero steel production.  A recent report by the Energy Transition Commission (ETC) sets out how critical government investment is to scaling up net zero technologies to cut the carbon emissions from steel production. It also highlighted the role the UK government can play in aligning the industry on decarbonisation standards and driving strategic investment in the sector.

The opportunity is clear. By linking the proposed funding to clear requirements that drive a transition away from coal-fired blast furnaces, the government will accelerate the delivery of low emission and net zero steel to the UK market. This would position the UK as a climate leader, allowing it to carve out a UK market for responsibly produced steel and capturing a competitive edge for the steel industry.

The knock-on effects

A net zero steel industry wouldn’t just create new market opportunties for the UK, it would grow access to renewables across the country – hugely supporting the energy transition we urgently need to see. As clean energy sources are needed to get the steel industry to net zero, accelerating steel decarbonisation will grow renewable energy infrastructure across the country, supporting the UK to roll out zero-carbon grids by 2035 – a mere 12 years away. This will allow clean electricity to be delivered for not just steelmakers but for homes and transport alike.

Upscaling of this infrastructure will enable the green hydrogen economy to mature, another cornerstone required to support clean steel production. What’s more, a range of new skills will be required to work in this future net zero steel economy and the renewable energy industries which support it. Entire workforces can be upskilled to reindustrialise and create thousands of new green jobs in renewable energy generation, hydrogen production and the maintenance of new technologies like carbon capture and storage.

What’s at stake?

A net zero future for the global steel industry is very clear. It’s not only necessary and inevitable, but brings with it important social and economic benefits. Governments have woken up to not just the need to decarbonise the steel industry to help tackle the climate crisis, but also the economic opportunities of supporting net zero steelmaking and the wider net zero transition. Without clear and consistent support, the UK risks not just missing out on many economic opportunities, but also perhaps the future of a manufacturing base altogether. With the UK steel industry already contributing £2.4bn directly to the UK economy and supporting 39,000 jobs, it’s clear the cost of inaction is far too high.

The question is not whether we can afford to decarbonise our steel industry, but whether we can afford not to. The UK risks missing out on a range of economic and social advantages if it fails to transition. Decarbonisation is economic competitiveness in a highly competitive international steel market. The UK government must ensure that clear, consistent and immediate decisions are taken to support the future of the UK steel industry and the country’s net zero transition.