New £250m funding will support UK steel industry cut emissions

Multinational steelmaker ArcelorMittal has said it plans to be carbon neutral in its European operations by 2050. Image: ArcelorMittal
Multinational steelmaker ArcelorMittal has said it plans to be carbon neutral in its European operations by 2050. Image: ArcelorMittal

The Government has announced £250 million funding to help the UK steel industry transition to a low carbon alternative, including using hydrogen.

The funding is part of £390 million government funding to help industry cut emissions and achieve ‘net zero’ in accordance with the UK Climate Change Act.

Steelmaking accounts for roughly 15% of industry emissions in the UK, and the Clean Steel Fund will help the sector transition to lower carbon production through new technologies and processes.

Gareth Stace, UK Steel director general, commented: “Today’s announcement of the Clean Steel Fund is extremely positive news for UK steelmakers and the whole of the UK’s decarbonisation efforts. The fund is a vital step towards further reducing our carbon footprint here in the UK and will cement our position in a future low-carbon world."

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He added: “Recent years’ Government policy of carbon taxation and renewables funding has added costs to steel production through higher energy bills. As steel is an intensively traded product, this has had a negative impact on the sector’s competitiveness and leads to fears that we are exporting steel production, its jobs, and emissions, rather than lowering emissions at home.

“It is crucial that the Clean Steel Fund is designed in a manner that can be best used by the steel sector and make maximum use of funds allowed by state aid. This is not a time to be too cautious, as UK steelmakers face an uncertain business environment. The Government needs to move swiftly to secure a bright future for the sector while addressing the elements which undermines our competitiveness.”

An extra £100 million funding has been announced to enable greater use of hydrogen as a decarbonisation option across the energy system. Hydrogen could enable a pathway to lower carbon steel production and support broader efforts to decarbonise industry.

The Low Carbon Hydrogen Production Fund will also encourage future private sector investment in low carbon hydrogen to support scale up and market development that aligns with the UK’s clean growth objectives.

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