The UK parliament’s Business, Energy and Industrial Strategy (BEIS) Committee called on the government to establish a steel sector deal to address long-running challenges to the industry’s competitiveness, including high energy prices and barriers to supplying steel for major public projects.
The deal should be made part of a strategic plan for decarbonizing the industry and protecting jobs, the committee said in a report published Nov. 5.
The UK steel industry is in urgent need of government support with long-standing issues such as electricity costs and improving the use of public procurement, but the government should go the extra mile by bringing forward a steel sector deal to help UK producers compete internationally and transition to a low-carbon future, the report said.
It notes decarbonizing the steel industry – given its significant contribution to greenhouse gas (GHG) emissions – is an important part of meeting the government’s target to bring all GHG emissions to net zero by 2050 and to cut them by 78% by 2035.
However, the government currently lacks a roadmap or overarching strategy for decarbonizing steel, the report said, identifying a range of technologies fit for the task, but adding that the steel sector was holding off from investing in them without certainty and direction from government.
The committee recommends the steel sector deal deliver a cohesive plan for decarbonizing the steel industry which should be announced no later than summer 2022.
This year’s soaring natural gas and power prices prompted Liberty Steel UK, part of metals and energy group GFG Alliance, to run its Rotherham electric arc furnace – one of the UK’s most electro-intensive industrial sites – at night (between 11 pm and 6 am) when energy tariff is lower.
Back in September, steelmaker British Steel said – because of the UK’s high dependence on gas for power generation – spiraling energy bills were putting the UK steel industry at an increasing disadvantage to its European counterparts.
Among other concerns, the report was prompted by the collapse in March 2021 of UK-based Greensill Capital, the main lender to GFG Alliance, and an interrelated cash squeeze felt at a few GFG Alliance-owned companies.
“The systemic issues at the heart of GFG Alliance has highlighted the vulnerabilities of Liberty Steel and its place in the wider steel sector in the UK,” Darren Jones, Chair of the BEIS Committee, said in a statement.
— Ekaterina Bouckley
