Emergency support for British Steel shows the UK must modernise to stay competitive in a changing world

14 April 2025, 15:11

The emergency measures to rescue British Steel reflect the difficult challenges the UK businesses face to remain competitive in a changing world.

Both Tata, the owners of the Port Talbot steelworks, and Jingye, the former owners of the Scunthorpe plant, have made clear that the UK cannot compete against China and India when it comes to the production of steel using blast furnaces powered by coke.

This is partly due to our insistence on the polluters pay principle, which means steel manufacturers are charged for the carbon dioxide that they produce because it imposes costs on others through climate change impacts.

It is clear that the costs of production, including labour, for traditional steelmaking are too high in Britain. We cannot be competitive by clinging on to the technologies of the past. We have to modernise our economy if we want to succeed and prosper.

There is a future for British steelmaking using new production processes that are cleaner and more efficient. Electric arc furnaces produce much less carbon dioxide and allow new steel to be made from old scrap.

The transition from old blast furnaces to new electric furnaces in Port Talbot and Scunthorpe could have been better planned and smoother. Both the owners and successive governments bear responsibility for the difficult and painful path that has been followed instead.

Those who argue that the way forward is by the UK ceasing efforts to stop climate change, and allow old damaging industrial processes to continue, have not understood what is at stake.

If we give up on stopping climate change by reaching net zero emissions of greenhouse gases, families and businesses will end up paying far more through the damage caused by rising sea levels and more extreme weather events.

We cannot seriously expect to protect lives and livelihoods by copying Donald Trump’s wilful blindness to the reality of climate change.

Britain does not need new mines to produce coke for steelmaking, but we do need cheaper electricity generated by clean domestic renewables instead of dirty and expensive natural gas.

And we may be able to produce green steel in the future using renewables to create hydrogen as a fuel instead of coke.

Green steelmaking will require investment, but it will allow our industry to be competitive in the 21st century.

Bob Ward is Policy and Communications Director at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics

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