Potential £300m offer to enable green steel switch at British Steel

The UK government is likely to provide hundreds of millions of pounds of support to help Britain’s two biggest steelmakers go green.

Funding for Scunthorpe-headquartered British Steel and Tata Steel UK is expected to be unveiled by the Chancellor, Jeremy Hunt, this week.

Each business is forecast to receive around £300m of grants to help fund a transition away from coal-fired blast furnaces and help with energy costs. And the backing will also protect thousands of jobs.

Both companies’ blast furnaces use massive quantities of coking coal to smelt iron from ore-bearing rock. They produce huge amounts of carbon dioxide as a result.

The BBC has reported the Department for Business, Energy and Industrial Strategy is working with the steel industry to secure “a sustainable and competitive future”. The broadcaster adds it understands from its sources that a £300m funding package is being considered for British Steel.

It follows a request by British Steel – owned by Chinese company Jingye – for hundreds of millions of pounds of grants to prevent closure of its blast furnace at Scunthorpe.

Responding to news of the anticipated Government cash for British Steel, Charlotte Brumpton-Childs, national officer for the union GMB, said: “Any investment in the UK’s beleaguered steel industry is welcome.

“But ultimately this is a sticking plaster – it does nothing to address the wider issues in the industry; catastrophic energy costs and a grossly uneven international trading environment.”

There are two main methods for producing low-carbon or “green steel”. One involves making iron using hydrogen instead of coal. But this would require a huge investment in green hydrogen to ensure gas supplies from renewable sources.

A more likely option is a switch to electric arc furnaces. These would recycle the scrap steel the UK produces and could be powered by electricity from renewable sources.

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