Unions Want £12Bn To Make Green Steel

By Paul Homewood

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h/t Gareth Beer

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Tata’s plan for greener steel would see a four-year shutdown in Wales but unions and locals are adamant there is another way

For more than a century, the steelworkers of Port Talbot have poured molten metal: it has been the lifeblood flowing through the heart of their coastal south Wales town.Rising between Swansea Bay and the heather-clad hills of west Glamorgan, the plant’s steaming chimney stacks have shaped not just the skyline but the history, economics and even culture of the community.“People’s fathers and grandfathers are steelworkers,” says Gavin John, who owns Afan Ales, a craft beer shop in the town centre. “It’s ingrained in you from a young age: once you’re older you can get a job at the steelworks and you’re made.”

Many of his regulars work at the steelworks or one of its suppliers, or have family who do. The plant, which employs more than 4,000 people in a town of about 32,000, is emblematic not just of the community but of the entire steel sector, and even of the vestiges of UK industrial prowess.

Trade unions and industry figures say this year is shaping up to be a crunch one for Port Talbot and for British steel, a “crossroads” from which the sector will either limp on in managed decline or thrive anew.

Unite, Britain’s biggest trade union, is about to present the government with a £12bn plan that it says can ensure a phoenix-like renaissance. The blueprint, a summary of which was shared with the Observer, is a response to several perceived threats.Indian giant Tata Steel, which has owned the site since 2007, is expected to announce plans to mothball its blast furnaces for four years while it builds a greener, cheaper electric alternative. In November, Tata postponed official confirmation of the closures, which unions say could cost 2,500 jobs directly, and hundreds more in the wider community.

But industry sources believe the stay of execution was temporary, with the axe falling early this year. This would be controversial given that Tata’s plan involves £500m of taxpayer subsidy.

In Scunthorpe, the UK’s only other blast furnace site, a similar £1.25bn plan is raising questions over the future of about 2,000 workers. That plant’s owner, Chinese firm Jingye, rescued British Steel in 2020, promising a “new chapter” in UK steelmaking. It, too is expected to ask for £500m in government support.

Both Jingye and Tata want to build electric arc furnaces, which offer the ability to recycle scrap steel using clean electricity. Blast furnaces rely on coking coal, which emits large amounts of carbon.

In the meantime, Britain would be the only major economy in Europe and the G20 with no ability to make steel from scratch in a blast furnace, relying instead on imported steel for the aerospace and automotive sectors and to make hundreds of miles of railway track.

Unite believes the eco-friendly switch can be made without devastating communities through job cuts, or letting the blast furnaces go cold.

Under Unite’s proposals, the government would invest £12bn over 12 years to spur a steel renaissance which, it says, would pay for itself in 10 years via increased tax receipts. Its plan would keep the blast furnaces open during a transition to fully decarbonised steelmaking involving electric arc furnaces and direct reduced iron furnaces (DRIs). DRIs can use green hydrogen – extracted from water using renewable energy – rather than gas, to make virgin steel.

Unite’s plan is broader and, crucially, proposes a 40% subsidy for the crippling energy costs that have made UK steelmaking an exercise in burning money in recent years.

British manufacturers pay 86% more for their energy than competitors in Germany and 62% more than in France, and charges for connection to the National Grid are particularly high. The move to green steel will require even greater electricity usage, says Unite, so industry must be prioritised for upgraded connections to the grid.

https://www.theguardian.com/business/2024/jan/07/port-talbot-fights-to-keep-furnaces-burning

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So there we have it.

Taxpayers must stump up another £12 billion, and also subsidise electricity costs, both as a direct consequence of Net Zero.

As for that “green hydrogen”, where on Earth is that supposed to come from? We have no surplus wind power to speak of, and won’t do for a long time to come. And when we do, it will be so expensive that it too will need subsidising.

And when all of this is done, the UK steel industry still won’t be competitive with China.

Yes, we can impose import tariffs, but that will simply put up costs for the products that use steel.

Would it not make more sense to build some new, modern blast furnaces, which are by far the cheapest way to make iron and steel?