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Recent commentary has assigned blame to Ed Miliband and the UK’s net zero ambition for the ongoing crisis in the steel industry, but experts assert that this perspective is misguided.
On Saturday, the UK Parliament enacted legislation granting emergency powers to manage the last significant manufacturer of mass-produced virgin steel in England, located in Scunthorpe. This decision came after the plant’s Chinese owner, Jingye, opted not to accept governmental assistance to sustain operations in the immediate future.
Some members of Parliament and various commentators have pointed fingers at the energy secretary, accusing him of exacerbating the steel industry’s troubles through net zero policies and by opposing a proposed coalmine in Cumbria, which they argue has led to increased energy and coking coal costs required for steel production.
During the parliamentary debate, shadow business secretary Andrew Griffith remarked, “The responsibility for this situation lies squarely with the energy secretary and the prime minister who appointed him.”
Andrew Neil voiced criticism of Miliband, dismissing his efforts as “net zero nonsense” and proclaiming: “Yet now Miliband presents himself as a champion for British steelworkers. The reality is that the political establishment has disgracefully let them down, particularly net zero advocate Miliband.”
In the right-leaning media, Miliband faced intense scrutiny, with calls emerging for his removal from office and numerous articles attributing the precarious situation at the Scunthorpe facility to his policiesblaming the energy secretary for these challenges.
However, experts are refuting this characterization. Prof. Rob Gross, director of the UK Energy Research Centre, emphasized, “The mission for clean energy can actually assist in reviving the steel sector. High energy costs in the UK are certainly impacting steelmakers, but these costs are not a product of net zero policies. The nation is heavily reliant on volatile gas prices, which significantly influence electricity costs.”
He added, “Britain is endowed with remarkable wind energy potential, which could lead to stable and affordable energy prices. Building clean energy infrastructure will enable us to enjoy lower prices for generations. Moreover, the shift towards clean energy will undoubtedly increase steel demand for renewable energy facilities like wind farms and nuclear plants.”
Conservative lawmakers and those from Reform UK have posited that the cancellation of the coalmine in Cumbria is a significant factor in the UK steel industry’s decline. Tory MP Graham Stuart remarked that it was implausible for the government to import coking coal from Japan when there was a chance for environmentally friendly coking coal production in Cumbria, which could have created numerous jobs. Richard Tice, deputy leader of Reform, contended that the government had “missed” an opportunity to utilize British coal from this site.
Nevertheless, the coal from this proposed mine would not have met the necessary quality requirements for Scunthorpe’s operations, as a substantial portion, estimated at 85%, was destined for export due to its high sulphur content.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, noted, “The persistent high energy prices, which escalated significantly following the Ukrainian conflict, have been the tipping point for plants in Scunthorpe and Port Talbot. The move toward net zero presents a pathway to energy independence, lessening our vulnerability to erratic gas prices influenced by international powers.”
She further explained that British Steel acknowledged it could not use coal from the proposed coalmine, citing the sulphur content as too high. Additionally, the mine operators indicated that the majority of the yield would be exported, undermining claims that it would be a panacea for local steelworks.
Ralston highlighted that the decline of the British steel industry has been ongoing since the 1970s, long before net zero policies were established. She pointed out that employment in the sector has plummeted from around 323,000 steelworkers in 1971 to just 34,500 by 2014.
A Labour source echoed this sentiment, referencing a statement from UK Steel that identified the primary cause of price disparities as wholesale electricity costs, primarily driven by the nation’s dependence on natural gas. They noted that gas prices influenced energy costs 98% of the time in the UK, in stark contrast to the EU average of 40%.
The source remarked, “Our aim is to establish clean power by 2030, as homegrown energy is key to safeguarding billpayers and enhancing the UK’s energy independence. Initiatives like the British Industry Supercharger are already making strides to align energy costs with other major economies, reducing network charges by 60% for eligible firms, especially in sectors like steel that face soaring electricity expenses.”
In contrast, countries such as Germany, Sweden, and China have implemented industrial strategies to subsidize and sustain their steel industries. Experts argue that the issue lies not within net zero strategies, but rather the absence of a coherent UK strategy for steel.
Sam Alvis, an associate director at the IPPR think tank, stated, “It’s misguided to attribute the steel industry’s challenges to climate policies, especially those influenced by an energy secretary who has only been in office since July. The struggles stem from nearly two decades of mismanagement and increased competition globally. While energy prices are indeed a factor, they are shaped by gas market dynamics, not net zero initiatives. Furthermore, rising costs of raw materials like iron ore and coking coal also play significant roles. The steel sector has long been in need of strategic guidance, and the government’s commitment to clean manufacturing and supply chains signals a much-needed direction.”
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