UK falls further behind in green steel race with EU

Mar 08 2023

Updating analysis from 2021, the Energy and Climate Intelligence Unit (ECIU) found the UK had one planned project compared to 38 in the EU.

The one UK planned project is at British Steel’s Scunthorpe plant which is part of the Zero Carbon Humber initiative. The plant would use blue hydrogen which is produced from gas through a process called steam methane reforming combined with carbon capture and storage to catch some, but not all, of the resulting carbon emissions.

The majority of EU projects use green hydrogen, made through electrolysis from renewable electricity, producing no emissions. Since 2021, the number of planned green hydrogen steel projects has doubled with some projects having switched from blue to green hydrogen in the past two years. There are ten clean steel plants planned in Germany, of which nine are based on green hydrogen.

Jess Ralston, Energy Analyst at the Energy and Climate Intelligence Unit (ECIU) said, “With car manufacturers starting to seek out sources of green steel to back their EV expansions, will the UK be in a position to compete? The gas crisis has spurred a dash from the US and EU to build green industries. Does the Chancellor have something up his sleeve to ensure the UK doesn’t fall further behind on steel?”

The predicted price of blue hydrogen has gone up recently as gas prices have increased and are set to stay above pre-crisis levels for several years to come. The Russian invasion of Ukraine gas spurred more than $70 billion of new investment in green hydrogen.

The Government is said to be in discussion with the UK steel industry about a support package that would help it transition to greener technologies. Discussions are ongoing in the US and EU about ‘carbon border adjustment mechanisms’ that would add costs to non-green steel imports [5]. The UK imports, but also exports some steel.

Green steel will underpin country and company commitments to reach net zero – 92% of global GDP is now covered by a net zero commitment. Members of the SteelZero initiative for example ‘make a public commitment to buy and use 50% low emission steel by 2030, setting a clear pathway to using 100% net zero steel by 2050’. They include offshore wind giant Orsted and car manufacturer Volvo which aims to sell only electric cars by 2030. Ford has signed to a deal with Tata Steel's Dutch arm to supply green steel.

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Energy and Climate Intelligence Unit

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