The UK government's steel decarbonisation strategy is "piecemeal" and lacks a broader industrial policy, independent climate change think-tank E3G said today.
It said the UK is "not far behind" European counterparts with steel decarbonisation, citing deals to transition current blast furnace-based sites, implementation of a carbon border adjustment mechanism and tightening emissions trading allowances.
But the UK has made little progress on power grid expansion, and has been slow to develop demand-side mechanisms, E3G said.
It is vital that electricity costs are brought down for industrial users, which will otherwise face "fierce" competition from overseas producers that pay less for power. The government should also move to increase steel scrap processing and establish supply of hydrogen and green iron — without adequate scrap supply, a 100pc EAF-based sector will rely on imports, E3G said.
The think-tank said the government should establish a long-term strategy "that includes a vision for the future role of the steel sector in the UK economy and how it will be integrated in other UK manufacturing sectors".
Just becoming a secondary steelmaker will mean the country cannot produce all the requisite grades for its automotive industry, it added.
"There is a risk that without the ability to produce a diverse suite of products, some steel companies may suffer from negative commercial outcomes from weaker business models," it said.
In its steel policy scorecard comparison, E3G rated the UK C+ for its policy direction and clarity, and B- for its public funding.
