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| UK steel decarbonization |
The UK steel decarbonization failure reveals the cost of poorly coordinated climate policy. Despite national CO₂ targets, core structural flaws remain. British steelmakers face rising costs, policy inconsistencies, and delayed green transitions.
In 2023, UK steel plants emitted nearly 9.9 million tons of CO₂, largely from Port Talbot (Tata Steel UK) and Scunthorpe (British Steel). Despite wind energy overtaking coal, high electricity prices and insufficient state aid obstructed conversion to EAF. The UK steel decarbonization failure stems not from technical barriers but economic ones: EAF construction at Port Talbot requires £1.25bn, and over £2bn at Scunthorpe. These costs exceed the financial capacities of margin-constrained producers.
Government Subsidies vs. Structural Problems
The government provided £500 million to support EAF construction at Port Talbot, plus £80 million in compensation for job losses. British Steel, owned by China's Jingye Group, rejected a similar offer due to a smaller equity share. This led to its temporary state administration in April 2025. Meanwhile, the high cost of green electricity (60% higher than EU average) persists, undermining EAF profitability.
As a result, steelmakers face a deadlock: operating BF-BOF is unsustainable under rising carbon permit costs, while switching to EAF remains financially unjustifiable. The UK steel decarbonization failure illustrates how unclear incentives and inconsistent support deter private investment in cleaner technology.
Scrap Market Reversal and Missed Hydrogen Targets
UK scrap exports could cease entirely by 2028, if EAFs at Port Talbot and Scunthorpe start as planned. In 2024, scrap exports stood at 7.6 million tons. However, hydrogen-based steelmaking is not progressing. Unlike the EU’s 23 active H₂-DRI projects, the UK has none. BP’s HyGreen Teesside project (500 MW) was indefinitely frozen in March 2025.
Similarly, CCUS progress is fragile. After two failed attempts, the current plan includes four clusters, but long-term targets remain uncertain. The first two projects in the East Coast Cluster may be operational by 2028, yet earlier failures leave stakeholders cautious.
ScrapInsight Commentary
The UK steel decarbonization failure reveals how weak industrial protection, high green energy costs, and policy fragmentation slow transition efforts. If current plans hold, the UK may halt scrap exports by 2028, reshaping global EAF feedstock flows. This raises critical questions for scrap-deficient economies like Ukraine, where industrial policy must secure feedstock amid shifting trade balances.
