The government’s new steel strategy, due in December, is built around a central, unresolved conflict: its “Net Zero” climate goals versus its “primary steelmaking” pledge. Business Secretary Peter Kyle’s new plan for Scunthorpe brings this clash to a head.
The Net-Zero goal demands the closure of the “carbon-heavy” blast furnaces. Kyle is backing a switch to “cleaner electric arc furnaces” (EAFs) to achieve this, securing the plant’s future in a green economy.
The “Primary Steelmaking” pledge, however, relies on those very same blast furnaces. When the government took control of the plant in April, it “repeatedly said” it was to “preserve ‘primary steelmaking'” (making virgin steel from iron ore). EAFs, which melt scrap, cannot do this.
This has created a major political and industrial dilemma. Unions, while welcoming a “just transition,” are insisting that the government “maintain primary steelmaking capacity.”
The government’s only way to square this circle is a costly and “financially dubious” compromise: a new plant to make Direct Reduced Iron (DRI) using green hydrogen. This would feed the EAFs, creating low-carbon primary steel. But with the £2.5bn steel fund already depleted, this perfect solution may be an unaffordable fantasy.
