Supporting our steel industry transition to a green future is key to levelling up
At the last election, voters in Bridgend put their trust in me and the Conservative Party after three decades of Labour dominance. We promised to deliver Brexit and then use the freedoms won to bring real change to our communities. Restoring our steel industry with support for green steel is a clear way for our party to repay that promise.
The number of people who work in Britain’s steel industry has more than halved since 1990. We must arrest this trend if we’re to deliver on our 2019 mandate. Given it’s not feasible for the UK to compete with the steel giants like China or the US via taxpayer subsidy, we should invest in new ways to give our steel a competitive edge.
Though the British steel industry is smaller than it once was, it still leads in expertise, which we should exploit. There’s a fantastic opportunity for the industry to become a world leader in clean steel, which is why I recently became a Green Steel Champion for the Conservative Environment Network.
Steel, the bones of our buildings and infrastructure, is a fundamental ingredient to economic growth. It’s synonymous with the industrial revolution, leading to the tremendous advances that have made the tallest skyscrapers possible. But it also represents one of the toughest obstacles to decarbonising the global economy. Just 553 coal-powered steel plants worldwide are responsible for nine per cent of global CO2 emissions.
Here at home, Port Talbot’s iron and steelworks dominate UK steel production alongside Scunthorpe’s. Together they represent 95 per cent of the emissions from the UK’s steel sector and 15 per cent of the UK’s overall industrial emissions. The main two options being considered by the government for decarbonising these two industrial clusters are carbon capture and storage technology. This would preserve the existing coal-based production method but stop most of the polluting gases reaching the atmosphere - and electric arc furnaces (EAFs) - which would use lower-carbon electricity to recycle scrap steel.
Rather than foregoing the opportunity to ramp up our green steel sector, we should develop tools to encourage others to do the right thing
Port Talbot faces significant challenges in retrofitting the steelworks with carbon capture technology and even greater challenges in transporting and storing the CO2. That means conversion to an EAF may be more likely, but this would mean downgrading our steelworks to less labour-intensive “secondary” steel production, which in turn means lower-grade steel and job cuts. While this technology may make sense in other places, it is hardly going to level up Bridgend.
However, there is a potential third way: fossil-free high-quality steel. Sweden has delivered the world’s first shipment of low-carbon steel produced by replacing coking coal with hydrogen. Should the hydrogen be produced via zero-carbon electrolysis, it would enable primary steel production with virtually no carbon emissions.
It’s a classic example of Britain’s net-zero ambition providing economic and industrial opportunity. Our chance to get ahead in this technology, however, is getting slimmer as other countries seek to do the same. Trials have begun across Europe and the United States, while China’s emissions per ton of CO2 have also been declining. If we do not act fast, we could miss out on the opportunity for our own steel sector and remain reliant upon imports from other countries.
Investment in a green hydrogen-based steel demonstrator project via the Clean Steel Fund along with prioritising green hydrogen in the new Net Zero Hydrogen Fund would be the next step towards commercialisation. We should also work with countries that are leading in this technology, such as Sweden and the US, to explore areas to cooperate.
If we were to scale up our green steel sector, however, we’d still find it difficult to compete with countries like China which have lower standards and cheap labour costs, which are the main factors behind British steel’s decline. Newer methods of production like hydrogen steel, or additional infrastructures like carbon capture and storage technology, would admittedly add costs rather than reduce them, at least in the first instance.
But rather than discouraging us from decarbonisation and foregoing the opportunity to ramp up our green steel sector, we should develop tools to encourage others to do the right thing. A carbon border adjustment mechanism (CBAM) has rapidly risen up the agenda over the past year or so. It would see a carbon price levied on dirty imported steel at the border to match our own domestic carbon price in the UK Emissions Trading Scheme, raising the costs of climate inaction for others and creating a level playing field for our homegrown steel sector as it cleans up its emissions.
Border levies are by their nature tricky things to design and will require careful thought to implement successfully. The European Union’s unilateral approach, which risks being labelled as a tool for blatant protectionism, is precisely what not to do. Protectionism under the guise of climate action risks a backlash against decarbonisation, restricting progress rather than promoting it. Instead, the UK can seek to work with others, particularly the developing world and the World Trade Organisation, to create a ‘gold standard’ CBAM.
A green steel demonstrator project and developing the right carrots and sticks for progressing global industrial decarbonisation provide pathways to renewal for British steelmaking. Given the concentration of the UK’s steel industry in red wall areas, this could play a key part in delivering on our 2019 election message of reviving the fortunes of constituencies like Bridgend.
Jamie Wallis is the Conservative MP for Bridgend.
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