As a critical component to scaling green infrastructures and industries, securing a bright future for UK green steel should be a priority for policymakers. Without urgent intervention, however, the industry faces a difficult period ahead; an outcome that could trigger devastating job losses in industrial heartlands, widespread implications for steel communities, the offshoring of emissions in place of a green industrial strategy, and a significant hit to the strategic capability of the UK economy. 

The UK Budget is a key opportunity to inject the levels of investment and policy ambition needed to secure a thriving future for UK steel, helping the UK Government to deliver on the promise of levelling up while rapidly reducing industrial emissions in line with government targets, stimulating investment in industrial towns and cities, securing good green unionised jobs in a strategically important sector, enabling further investment in industries that we will need in the future, and boosting innovation and UK exports. 

UK steel plays a vital role in today’s economy, contributing £2.0 billion in terms of Gross Value Added, while making a £2.1 billion direct contribution to UK GDP and a £1.7 billion direct contribution to the UK’s balance of trade via exports. Further, the sector supports households and livelihoods in communities whose histories and identities are rooted in the steel. Around 33,700 people are directly employed in the UK, with tens of thousands more in the wider supply chain, and the average steel job pay is significantly higher than the UK national average.

Today, the industry currently stands at a critical juncture. The sector was already battling the drop in demand amid the pandemic-induced economic hibernation, uncertainties posed by trade negotiations, price slumps teamed with unfair trading practices and the dramatic upsurge in competitive international steel production, and now faces the ongoing energy crisis. As one of the highest industrial carbon emitters the sector faces the additional challenge - and opportunity - of decarbonising in line with net-zero targets.

The future of steel is green: the challenge is how to get there in a way that is both fair and fast, in a way that maximises the benefits of low-carbon steelmaking.

Absent intervention, there is a longer-term risk that while other countries push ahead to safeguard a thriving future for green steel - with Bellona having identified tens of hydrogen-based steel production projects either planned or underway across Europe - UK steel could be regarded as a sunset rather than a sunrise industry, resulting in devastating consequences for the economy, steelworkers and communities. Additionally, a failure to secure a just transition for the sector and allow it to further demise will result in the UK increasing its reliance on importing from higher-carbon intensity international steel, hampering our trade balance at a time of trade-related uncertainty and worsening global emissions as we attempt to tackle the climate crisis in ways that produce good union jobs in the UK.

As the trade union-led campaign ‘Britain, we need our steel’ notes, the industry is critical to transitioning to a low-carbon future, ensuring that this transition is supported and shaped by workers, and should be a foundation for a post-pandemic economic recovery, supporting thousands of high-quality jobs in areas that need them. Securing a thriving future for decarbonised steel is vital to supporting an ambitious green industrial strategy as part of a just transition, with steelworkers, trade unions and steel communities at its heart. 

The UK Government should provide the investment needed to set out an ambitious roadmap for green steel to enable the sector to be world-leading, showcasing the government’s commitment to the “levelling up” agenda and playing an integral role in setting the UK on the path to meeting its net-zero goals as part of a just transition. Bold and urgent action is needed to provide investment for the sector to address the multiple challenges it faces and secure a thriving future for UK steel. 

‍We call on the UK Government to enact the following 3 demands to deliver a strategy for investment to secure a world-leading UK green steel sector in the Budget: 

1. The UK Government pledged £250 million as part of the Clean Steel Fund two years ago, yet the funding for this has not yet been allocated. It is crucial that the UK Government delivers on its promise to deliver on the Clean Steel Fund. The investment pledged through the Clean Steel Fund still leaves a sizable shortfall in overall investment required, meaning an urgent and significant expansion is needed to put UK steel on track to transition and lead on green steel production. 
2. The ongoing energy crisis poses a serious threat to the sector, and the jobs and communities it supports. The uneven playing field between the UK and EU energy prices costs the steel industry £50 million a year. Low-carbon steel technologies will rely heavily on electricity and a long term future for green steel means protecting steel jobs now. Intervention in the Budget to level out the playing field and address the structural uncompetitiveness of the UK steel industry should be a priority. 
3. The UK Government stands to get back millions from the EU from research funds for coal and steel at a time when research and development (R&D) in the steel industry is insufficient. These funds should be targeted to support innovation, research and development in viable green steel technologies such as hydrogen.  

Investment measures are the most immediate priority, but the opportunity to secure thriving future for UK green steel can be maximised by a series of longer term measures following the Budget: 

‍Put UK steel on a world-leading decarbonisation timeline: COP26 and the Net Zero Review fell short of providing details for a green steel implementation roadmap. The UK Government must work with the steel sector to  set out how steel production can be put on an ambitious path toward a world-leading low-carbon future, supporting a long term investment strategy, a clear commitment to exploring and investing in viable technological pathways for green steel, including through investment in hydrogen, and detailing key milestones, such as assurance to deliver a green steel pilot plant.  The roadmap must be shaped by and carried out in full consultation with steelworkers, trade unions and steel communities, ensuring those most involved in and impacted by the sector can steer its trajectory. 

‍Guarantee a thriving future for steelworkers and communities: The strategy to decarbonise the sector must ensure workers and communities are directly benefiting from opportunities of the transition. First and foremost, this should result in jobs being protected for steelworkers alongside the creation of high productivity high wage jobs, all of which should be rooted in comprehensive just transition policies to deliver the necessary support to workers, as outlined by the Trades Union Congress. This includes: ensuring new jobs that are just as good in terms of pay, skills, pensions; ensuring trade union recognition is not lost; a programme of investment in training and skills to ensure workers have access to training-related funding as part of the transition; and effectively harnessing transition-related knowledge from workers in the adaptation process. 

‍Boost demand for UK domestic green steel: Alongside measures to increase global demand for UK green steel, intervention is needed to prioritise domestic procurement of UK steel in the development of large-scale infrastructure projects. Enhancing the current approach to steel procurement can help create an integrated strategy to our industrial footprint, benefit local economies, and redirect the emphasis on price towards that of social value, from good quality jobs to advancing decarbonisation. While the final report by the Steel Procurement Task Force offers steps in the right direction, additional measures are needed to maximise the economic, social and environmental benefits of local procurement. The UK Government must address the current barriers facing domestic procurement, both at a national level and under World Trade Organization rules, and, as a priority in trade negotiations, ensure more stringent commitments, like local content requirements, to source UK steel in infrastructure projects does not result in further tariffs on UK steel. The need for this was highlighted by the recent trade union calls for targets on UK-produced steel in the HS2 rail project. In addition, the wave of local authorities declaring a climate emergency creates fertile ground for them to require infrastructure projects to use green steel. 

‍Safeguard UK green steel through trade and investment: Future trade deals could present barriers or opportunities to UK green steel. The recent US-EU trade deal partially lifts steel import tariffs from the EU, generating fresh concerns about the comparative attractiveness of UK steel exports. A forward-looking government should take a more active role in nurturing industries of the future like green steel by co-producing a green industrial strategy with a climate retrofit to UK trade and investment, ensuring trade policy helps drive a race to the top on worker protections and climate actions. While trade procurement policy reforms noted above are urgently needed, insights can be drawn from the recent moves in the US to invest in clean steel and create a trade policy framework that harnesses domestic procurement.