The UK government is set to announce £600 million in grants to support British Steel and Tata Steel UK in transitioning to greener production methods, according to sources. Chancellor Jeremy Hunt is expected to unveil the funding this week, with each company receiving around £300 million to help replace coal-fired blast furnaces with low-carbon alternatives and assist with energy costs.
The funding aims to protect thousands of jobs in industrial heartlands, including Rotherham, where Tata Steel employs about 2,000 workers. The switch from blast furnaces, which use coking coal and produce significant carbon emissions, is crucial for the UK to meet its legally binding climate targets. The steel industry is responsible for about 2% of UK carbon emissions, with Tata's Port Talbot plant alone contributing 15% of Wales' emissions.
However, industry experts warn that £300 million may not be sufficient for Tata, which estimates the cost of switching its Port Talbot plant to emissions-free 'green steel' at up to £3 billion. Henrik Adam, CEO of Tata's European operations, said the company needs 'the same support' as its competitors abroad, including ongoing assistance to equalise energy costs. Unite Union head Steve Turner described the industry as 'a whisker away from collapse' in a letter to Business Secretary Grant Shapps.
The government's support is expected to be conditional on investment pledges from the companies and a commitment to operate until at least 2030. The transition could involve electric arc furnaces powered by renewable energy, which would recycle scrap steel, or hydrogen-based production. Both options would eliminate coal use, raising questions about the viability of a proposed new coal mine in Cumbria.
Workers at Tata's Port Talbot plant are optimistic about the shift to low-carbon production. Laura Baker, who develops steel recipes for customers, said, 'It is so exciting to think about the future of this plant and the impact that we can have on decarbonisation for the whole of the UK.' The government emphasises it is working closely with the steel industry to secure a sustainable and competitive future.
