January 23, 2023 7.00 pm This story is over 10 months old

How £300m government handout will bail British Steel to go green

Government expected to announce £300m grant soon

With the government expected to announce a £300 million grant for Scunthorpe-based British Steel, what will be the two main options for the production of low carbon or green steel?

Chinese-owned British Steel, which employs around 4,000 people, and Tata Steel UK are each expected to receive around £300 million of grants to help pay for a switch away from coal-fired blast furnaces. The funding is likely to be unveiled by the Chancellor Jeremy Hunt this week and will also protect thousands of local jobs.

Making steel the traditional way using coke-fired furnaces is damaging to the environment and the steel industry is said to produced 3% of the UK’s carbon dioxide emissions.

There are two main options for the production of low carbon or green steel. A plant in Sweden is already using hydrogen instead of coal.

The more likely option, according to BBC Look North, is for the two UK plants to switch to electric arc furnaces. They can recycle the large amount of scrap steel the UK produces and could be powered by electricity from renewable sources.

The government’s cash is expected to be dependent on pledges of investments from the two UK steel firms and a guarantee that their plants will continue to operate to 2030.

This comes after British Steel previously informed the government that it could close one of the Scunthorpe blast furnaces as soon as next month, with the loss of 1,700 jobs.

This would be “followed by the second blast furnace closing later in 2023, creating cumulative direct job losses of around 3,000”, Business Secretary Grant Shapps and Levelling Up Secretary Michael Gove wrote.

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