The UK government should prioritise domestic steel in its infrastructure projects to boost the sector and capitalise on the opportunities brought by growth in offshore wind, a new report commissioned by industry association UK steel says.
Kallanish notes from report, titled Public Procurement of Steel: Time for New Thinking for a Thriving Industry, contains proposals aimed at improving the uptake of UK-made steel in taxpayer-funded projects and stopping that money being spent on importing foreign steel.
It highlights the opportunity for the government, as the single biggest purchaser of steel in the UK, to further support the sector by increasing its procurement domestically. Data shows that one third of the steel it procures is imported, costing UK taxpayers £1.5 billion annually.
Over the next decade, government steel requirements will exceed £4.3 billion without accounting for major initiatives such as carbon capture and storage, hydrogen infrastructure, nuclear energy, and offshore wind.
The UK Steel-commissioned report by Offshore wind experts LumenEE identifies the total steel needed for the rapid expansion of the UK’s offshore wind sector, out to 2025. It estimates up to 25 million tonnes of steel will be needed in the next 25 years for offshore wind investment around the coast of Britain. This single opportunity alone is worth approximately £21 billion in steel purchases.
UK Steel director-general, Gareth Stace, said, “The LumenEE findings on offshore wind alone illustrate what’s at stake: £21 billion in steel purchases that could drive a major upturn in UK production. Without decisive action, we risk losing this opportunity and continuing to fund foreign competitors instead of our own economy.”
The report’s key recommendations include utilising public procurement contracts, with government mandating or incentivising the use of domestic steel. This should be done where possible, for projects of energy, defence, and related infrastructure via domestic content stipulations in contracts where public funding or subsidy is involved utilising World Trade Organisation (WTO) opt-outs.
It also suggests using contracts for difference to evaluate the bidders’ contributions to sustainability, resilience, and local content, with these criteria applying to at least 30% of the volume auctioned annually. While nationally significant infrastructure projects should be required to adhere fully to the procurement policy note (PPN) for steel and be subject to local content requirements of not below 30%.
Additionally, a public-private partnership should drive investment into steel supply chains, which will attract inward investment, create jobs, drive economic growth.
Dan McGrail, chief executive of RenewableUK noted that this was the first time that the offshore wind sector’s technical steel requirements have been laid out for government, the renewable industry and suppliers to see.
“If the Government and steel industry carefully invests the £2.5bn steel fund in response to this huge growth area, then the wind industry’s Industrial Growth Plan, UK steel production, fabrication and national supply chains can all fall into step as a huge economic boon for the UK,” he said.
Community assistant general secretary Alasdair McDiarmid said: “The recommendations put forward to reform processes for awarding public contracts, maximising the use of locally-sourced steel and updating national procurement guidance, are all common-sense measures which the government could adopt swiftly.
McDiarmid endorsed the report and added, “this is the kind of transformational investment we have been calling for over many years and has enormous potential to strengthen UK supply chains.”
“This is a massive opportunity to create a prosperous end-to-end green domestic supply chain, and to harness the capabilities that already exist in UK steelmaking.”
Carrie Bone UK
