The UK government has targeted a 95 percent emission reduction from steelmaking by 2050, while the Climate Change Committee has recommended that emissions from ore-based steelmaking be near zero by 2035. The UK Steel trade association has published a new report, calling on the government to have a renewed focus on establishing a positive policy environment for steelmaking to create a net-zero steel sector in the UK and meet decarbonization targets.
The association stated that net zero steel production will be significantly more electricity intensive than traditional production methods. However, power prices for UK steel producers are almost 60 percent higher than those available to their European competitors. Parity of electricity prices and energy efficiency funding are essential to achieve the decarbonization targets and retain the UK steel industry’s competitiveness, the association said.
According to the report, without a global carbon price, increased climate change ambitions and accompanying costs in the UK will lead to offshoring of production and investment. Therefore, UK Steel stated that the government needs to introduce a carbon border adjustment mechanism. In addition, in establishing a strategy for decarbonizing steel, the UK must concern itself not merely with the emissions from domestic production but take a wider view and aim to reduce the overall emissions related to the UK’s steel consumption. Creating a mass market for net zero steel in the UK will drive down the country’s emissions and establish the conditions for UK steel companies to invest in decarbonization, confident that they can gain a return on that investment.
