Green steel ‘stimulus for the north’ could revitalise the industry and establish UK as a global leader in green steel technologies, according to IPPR North
Northern regions of England have a “unique opportunity” to become a low carbon steel production powerhouse, which would unlock local jobs, wealth and business opportunities in the wake of the pandemic while steering the UK closer to its climate goals, according to IPPR North.
In a fresh report released today, the progressive think tank argues the development of a low carbon steel industry in the North could “revolutionise” the local economy by preserving thousands of jobs, helping the UK deliver a net zero steel industry by 2036, and unlocking £3.8bn of market opportunities annually nationwide by the end of this decade.
It argues decades of deindustrialisation and neglect have reduced morale of the UK’s steel sector which has led to a widespread perception it is a sunset industry, but adds that the net zero transition provides a major opportunity to transform the sector’s fortunes.
England’s North is home to a significant number of the UK’s steel producers, as well as one-third of the industry’s workforce, and as such it can be at the heart of the UK’s effort to decarbonise its hugely energy-intensive steel sector, the report contends.
With the right investment from government and industry in jobs and a range of innovative low-carbon technologies, it claims – such as hydrogen, carbon capture and storage and electrification – the industry could “effectively” reach net zero by as soon as 2036.
Jonathan Webb, report author and senior research fellow at IPPR North, urged government, northern leaders, businesses and trade unions to work together to kickstart the sector’s transformation.
“We must act fast to seize the opportunity to recast steel as an industry of the future,” he said. “The time to act is now if we are to become competitive, future world leaders in green steel. So government, leaders, steel businesses, trade unions and others must collaborate without delay, commit to, and invest in a green steel stimulus for the North.”
IPPR North calculates that decarbonising the UK’s steel sector by 2036 would require £150m of annual government and industry investment until the 2030s, a figure that would rise to £300m annually by 2035 before dropping to £267bn by mid-century.
It estimates these investments could save roughly 12,000 jobs in the northern steel sector and a further 20,000 to 27,000 jobs in the steel supply chain across the UK.
Webb emphasised the steel industry “underpins” many towns and regions across the North. “If we are serious about powering up our regions, then we need to be serious about harnessing the incredible potential of green steel, to build the low-carbon infrastructure we need to level up for ourselves, here in the North,” he said. “Everyone must play their part, and if they do, we will realise a return on that investment that will more than deliver for all”.
The steel industry is widely regarded as one of the more challenging areas of the economy to decarbonise, with the energy-intensive process for steelmaking at present heavily reliant on fossil fuels such as coal, but there is also increasing momentum and investment behind the development of alternative steelmaking fuels such as green hydrogen across Europe that could threaten to disrupt the industry in the coming years.
As such, the government is facing growing pressure to speed up delivery of funding from its £250m Clean Steel Fund, which is aimed at supporting development of decarbonisation technologies in the UK. However, despite the Fund first being announced in 2019, no money is due to be handed out until 2023, while the embattled UK steel industry lurches from one crisis to the next.
The government has so far refused to intervene to provide funding for Liberty Steel, the UK’s third-largest steelmaker, after the company was recently thrown into turmoil after the collapse of its main lender Greensill Capital. And Liberty Steel’s woes come less than a year after Tata Steel, Britain’s largest streel maker, was rescued from insolvency by Jingye Group after failing to secure a rescue package from the government in the wake of the pandemic.
Meanwhile, the government has committed to “examine the implications” of a recommendation from the Climate Change Committee that the UK should set targets for ore-based steelmaking to reach near-zero emissions by 2035.
Responding to IPPR’s report, the Department for Business, Energy and Industrial Strategy (BEIS) emphasised the steel industry would play a “critical role” in providing the infrastructure necessary to drive a green economic recovery to the pandemic.
“We are working closely with the steel sector to support its transition to a low carbon future,” BEIS said in a statement. “We have announced a £250m Clean Steel Fund to support the industry to reduce carbon emissions, and our new Industrial Decarbonisation Strategy sets out how it can decarbonise in a way that supports competitiveness, jobs and clean growth.”