Corus steelworks in Port Talbot, Wales.
A vision for UK steel: a strong industry which helps tackle climate change
The world needs steel. But the steel industry has to do its bit to stop dangerous climate change too – globally it’s responsible for 7% of emissions, three times the entire UK’s impact.
The UK Government is teaming up with industry and academics to produce sector road maps to 2050 for the UK’s eight most energy-intensive industries – how these industries can do their part in tackling climate change and stay competitive. One of the first sessions – on iron and steel – was held at the University of Manchester earlier this month.
This is a big challenge, but as the Government guy said: “in a future carbon-constrained world – the sectors that cannot decarbonise will struggle”. I like the vision of the TUC and the Energy Intensive Industries Group, who said back in 2012 that the UK should “develop and grow the most world’s most energy-efficient” energy-intensive industries. Friends of the Earth agrees – we want to see a strong, competitive, low-carbon, job-rich, energy-efficient UK steel sector.
For me, 5 things stood out from this first session:
- Acting on climate change was not in doubt. This was not a session about whether the iron and steel sector should decarbonise, it was about how. Good for the industry, and the Government for bringing groups together to work out how to do it.
- Current policy is not strong enough to drive decarbonisation. Carbon prices in the UK are low and unpredictable. One attempt to deal with this – the Carbon Price Floor – looks hamstrung – George Osborne seems set to freeze it at next month’s budget. And what little incentive effect carbon pricing has is weakened even further because energy-intensive industries have successfully lobbied for almost total exemptions from it, and seem likely to do so in future. Alongside clearer, stronger carbon pricing and more effective regulation, policy is needed that focuses on carrots to help industry invest. One goal for the Steel Roadmap must be to outline the policies to do that.
- Industry’s lobbying needs to change focus. Ben Caldecott argued back in 2011 that simply shielding industry from carbon pricing without helping them invest in new technology will make industry less competitive in future. A recent report from British, and German economists argues: “Europe cannot compete in the global economy based on cheap resources…it must compete on innovation and efficiency”. I’d hope that future industry letters to The Times, unlike this one from last week, could stress the need for policies which help them invest in new technologies and decarbonise, rather than just focusing on the costs which they want removing.
- Serious additional industry investment is needed to take new technologies forward. EU industry and the EU commission have put $75 million over 6 years into the ultra-low carbon steel ULCOS project, which has driven forward R&D on new technologies. This is excellent work. But Tata Steel has annual revenues of $25,000 million; ArcelorMittal $84,000 million. The windfall profits from over-allocation of permits in the EU Emissions Trading Scheme have netted EU steel companies hundreds of millions of pounds. Giant corporations operating on multiple continents should put orders-of-magnitude more cash behind R&D and deployment of these low-carbon technologies. Government policy could support them – for example through the Green Investment Bank or Technology Strategy Boards – but ultimately it is the big international players who have to drive this technology forward.
- Consumption matters as well as production. The steel road-map is focussing on production. But equally important is consumption: Global steel demand is set to double by 2050. Even if that was entirely decarbonised, that would leave massive local environmental impacts from iron ore mining. There is a vast amount that we can do on material efficiency, such as projects like UKINDEMAND and WellMet2050, and in campaigns such as Friends of the Earth’s Make it Better. And then there is the argument that in a world of increasingly clear planetary boundaries being breached, maybe precious, immensely useful commodities like steel should not be wasted on making rubbish – www.roastmyweenie.com anyone?