New Steel Plan: Can the UK Afford Green Steel AND Primary Steel?

The UK government is attempting to achieve two conflicting goals in its new steel strategy: a green transition to electric arc furnaces (EAFs) and the preservation of its “primary steelmaking” capacity. The central question, however, is whether it can afford to do both.
Business Secretary Peter Kyle has backed the EAF switch at Scunthorpe to meet net-zero targets. But this move, on its own, would scrap the UK’s ability to make virgin steel from iron ore, a capability unions and traditionalists are fighting to keep.
The compromise is a proposal to build a separate, high-tech plant to produce Direct Reduced Iron (DRI) using clean hydrogen. This DRI could then be used in the EAFs, allowing for low-carbon primary steel production.
The problem is cost. “Industry sources have cast doubt on the financial viability” of this two-part solution. This skepticism is warranted, as Peter Kyle confirmed “hundreds of millions” of the £2.5bn steel fund have already been spent on operational bailouts for British Steel and Liberty Steel.
This “probably mean[s] less money for capital investment,” according to the text. The government’s December steel strategy will have to confront this financial reality. It may be forced to choose between its green ambitions and its industrial-strategic pledges.