Creating a Clean Steel Fund: call for evidence
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Detail of outcome
Transforming the steel sector is a long-term endeavour and the evidence received support wider government policy on industrial decarbonisation, as well as development of the Clean Steel Fund.
We will publish an Industrial Decarbonisation Strategy, to support manufacturing sectors to reduce emissions in line with the UK’s net zero target.
The call for evidence received 29 responses from a range of stakeholders such as trade associations, steel companies and academics.
The main issues raised fell into key categories including energy prices and other barriers, and decarbonisation technology options.
For energy prices, respondents noted that the global economic environment is especially challenging for the steel sector and the relatively high costs of electricity in the UK mean that this is felt even more keenly by UK steel producers. This also makes it difficult for companies to justify spending money on decarbonisation projects, many of which are likely to raise operational costs, at least in the short-term.
Regarding decarbonisation technologies, on the 3 main technologies (switching to lower carbon fuels, CCUS; and energy and material efficiency) discussed in the consultation, respondents stated that each of the technologies required further development to reduce the financial and technical risks. There was no clear consensus on which technology would be most suitable to decarbonise the industry, with a range of different solutions required, and a range of views on the most suitable way to proceed.
Beyond these themes other suggestions included:
- using the UK’s strong position in renewable energy for EAF production to produce low carbon steel
- taking advantage of the proximity of some sites in the sector to the North Sea, both in terms of access to renewable energy for the production of hydrogen, and for CCUS
- making clear the underlying value of steel, with its ‘multiplicity of uses and endless recyclability’, which they believed would be hard to replace in the medium to long term (at least 30 years)
- referring to the analysis in Capacities and Capabilities of the UK Steel industry [2017], which identified particular product strengths in rail, wire rod, and some coated products (and by implication relative weakness in many other products, with a declining market share and a negative trade balance).
The responses received do not consider the Coronavirus outbreak or the ensuing economic downturn in 2020.
Original call for evidence
Call for evidence description
We’re looking for supporting evidence to help us develop the detailed design of the fund, including on barriers to realising clean steel ambitions, and the opportunities to be gained in overcoming these.
The £250 million Clean Steel Fund will support the UK steel sector to:
- transition to lower carbon iron and steel production through new technologies and processes, placing the sector on a pathway that is consistent with the UK Climate Change Act (net zero)
- maximise longevity and resilience in the UK steel sector by building on longstanding expertise and skills and harnessing clean growth opportunities
We also intend to establish a new £100 million Low Carbon Hydrogen Production Fund, to support the deployment of low carbon hydrogen production at scale. This could enable a pathway to lower carbon steel production and support broader efforts to decarbonise industry.
Documents
Last updated 14 December 2020 + show all updates
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Summary of responses published.
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First published.