Schneider Electric: Green Hydrogen can Transform Steel
In the face of significant challenges, the British steel industry stands at a crossroads.
The UK Government’s promised rescue package for Port Talbot Steelworks, owned by Indian conglomerate Tata, has not worked and highlights the urgent need for transformation in this carbon-intensive sector.
As the industry grapples with job losses and declining production, some manufacturers are envisioning a greener, more sustainable future for British steel.
The decline of British steel
The once-mighty British steel industry has experienced a dramatic downturn over the past five decades.
From being the world's fifth-largest steel manufacturer in 1970, producing over 28.3 million tonnes annually and employing more than 320,000 people, the UK has slipped to 26th place globally.
In 2023, production plummeted to 5.6 million tonnes, with the workforce shrinking to approximately 33,500.
This decline has far-reaching implications for the UK's manufacturing capabilities.
Steel, the backbone of modern infrastructure, is crucial for producing everything from cars to heavy machinery and ships.
Its scarcity poses a significant challenge to the country's ambitions of re-industrialisation.
Why steel must get greener
The steel industry's carbon footprint is substantial, with approximately 1.85 tonnes of CO2 produced per tonne of steel.
This environmental impact, coupled with rising electricity prices, has further complicated the industry's prospects in the UK.
However, Alex Richards, Vice President EMEA for Mining Minerals and Metals at Schneider Electric, sees potential for positive change.
He says: "The steel industry is undergoing significant disruption and transformation on a global scale.
“For a long time, it has been a critical industry to the UK, so while the news about potential job losses obviously comes as a concern, it is essential to shift our focus from managing decline to seizing opportunities for growth at this pivotal juncture."
How green hydrogen can make steel sustainable
One of the most promising avenues for rejuvenating the British steel industry lies in the adoption of green hydrogen technology.
Alex explains: "Steel is a hard-to-abate industry, but also a key material for our decarbonisation efforts.
“In order to future-proof steel production in the UK, we need to be looking at adjacent industries that support growth and decarbonisation simultaneously through a transition to green steel."
Green hydrogen enables the production of direct reduced iron (DRI), which can be used to manufacture green steel.
"Producing DRI using green hydrogen can result in over a 95% reduction in CO2 emissions compared to steel produced with coal. This presents an opportunity to sustain a steel industry with significantly less environmental impact,” Alex says.
Balancing sustainability with workforce concerns
While the environmental benefits of transitioning to green steel production are clear, there are concerns about the impact on the existing workforce.
The recent announcement of 2,500 job losses at Port Talbot Steelworks, with an additional 300 cuts expected over the next three years, shows the human cost of industry transformation.
However, proponents of green hydrogen argue that this transition could create new employment opportunities.
"By linking the decarbonisation of British steel with the development of green hydrogen, the UK can play a significant role in the global clean energy transition and support the workforce by creating new green jobs," Alex explains.
The challenge lies in ensuring that the existing workforce receives the necessary support, upskilling, and advocacy to transition to these new roles.
Labour unions are currently negotiating for enhanced redundancy and retraining packages, highlighting the importance of a just transition.
As the UK steel industry navigates this period of transformation, the focus on sustainability and green technologies offers a glimmer of hope.
The adoption of green hydrogen in steel production not only addresses environmental concerns but also presents an opportunity to revitalise a struggling industry.
Alex says: "It's easy to look at news like today's and worry about the future, but with change comes opportunity. By embracing green technologies, the UK steel industry can not only survive but thrive, playing a crucial role in the global transition to a more sustainable future."
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