14:30 Jessica Morden (Labour)

I am grateful to the hon. Lady for giving way; she is being very generous with her time. She made the very important point a few moments ago that steel is at the heart of many of our growth industries. Does she agree that a growth industry for the future is green energy, and that whether we are talking about floating offshore wind or other forms of marine renewables, steel will be at the heart of them? To that end, does she welcome the agreement struck between RWE and Tata to explore the use of Welsh steel in the nascent floating offshore wind industry? Does she also agree that we need Government to be part of the discussion of how we support the growth of new green industries and ensure that British-made steel is at the heart of them?

I thank the right hon. Member for that intervention. I wholeheartedly agree; I am agreeing with all the interventions! He anticipates my next point, because I was about to say that steel will be integral part of the UK’s journey to reach net zero. Without a thriving steel industry, there can be no transition to a low-carbon economy that supports a range of industries, from automotive to nuclear and renewables, which he mentioned.

I am very grateful to the hon. Lady for giving way; she is being very kind in taking interventions. There have been suggestions that a closed-loop cycle could be created in south Wales, whereby floating offshore wind is used not only for electricity but to make green hydrogen for heavy industry in the area, including, of course, steel production. Contracts for difference could be used to support such a relationship. Will she join me in asking the Minister to clarify how the contracts for difference scheme could be adjusted, so that it supports renewable energy hubs that use multiple technologies, and to assess how such projects could be linked? The important words there are “multiple technologies”.

These interventions prove that we simply cannot decarbonise the economy without decarbonising steel. As Tata has highlighted, almost every aspect of the UK’s decarbonisation plan is steel-intensive, with 10 million tonnes of steel being required over the coming years for offshore wind, solar, nuclear, hydrogen, and carbon capture and utilisation storage projects. The “Britain, we need our steel” campaign was launched by the Community trade union and union partners in 2020. It is not just a slogan; it is a statement of fact.

The same is true for British Steel in Scunthorpe, which is paying nearly £1 million a day for electricity, the cost of electricity having risen tenfold since 2021. There is still real uncertainty about the situation of British Steel, and I am sure that the hon. Member for Scunthorpe (Holly Mumby-Croft), who is here, will speak about that shortly. I hope that the Minister can provide updates. It is imperative that talks between the company and the Government continue, and reach a successful outcome that ensures that steelmaking at Scunthorpe continues and decarbonises.

We need a Government who will support the industry in a move towards decarbonisation. We have read the reports of the £600 million that the Government have pledged, or are reported to have pledged, to Tata and British Steel this week to help with lower-emissions technology. I trust that we will get more details on this from the Minister later. I hope the negotiations continue and progress with urgency, and that any plan to decarbonise will be fully consulted on and agreed with the unions to ensure a just transition for the workforce. However, it is important to note that the support arrived significantly later than the support for other European countries did, and is significant lower. For example, the German Government have already spent €8.5 billion towards greening their domestic steel industry, and the French Government have spent €2.2 billion. British Steel Scunthorpe’s multi-union chair, Paul McBean, put it well in his recent interview with The Yorkshire Post , saying:

It is clear that the steel sector is committed to the transition to net zero, but needs a long-term policy framework to make that a reality without penalising steelmakers with gargantuan carbon prices in the interim years. As things stand, rising carbon costs are eating into any available capital that steel companies may have to invest in decarbonisation. That is completely counterproductive, and we need the Minister to act on it. That is a key point.

The Government have spoken about a roughly £1.5 billion package of support schemes for the industry. However, it is important to note that those schemes are spread across many industries, so £1.5 billion does not translate into very much direct capital support for the steel sector. In particular, the £1 billion carbon capture, utilisation and storage infrastructure fund is not money provided to steel companies to support CCUS on site, but investment in pipelines and storage that may at some point be used by steel companies—it is far from a certainty. For example, Welsh steel plants will not be using that infrastructure even if they opt for carbon capture, as it is all for the North sea. Let us not forget the £250 million clean steel fund promised by the Government led by the right hon. Member for Maidenhead (Mrs May), which disappeared without trace.

I also urge the Minister to look at proposals for a carbon border adjustment mechanism. The costs of the UK’s emissions trading system have spiralled over the past two years. Compliance costs for the sector reached £120 million last year, which is equivalent to 60% of the average annual capital investment of the sector, and are set to get much worse. A carbon border adjustment mechanism would create a level playing field by applying carbon prices at the border equivalent to those faced by domestic producers, ensuring that imported steel does not have a price advantage. The Community union has highlighted that such a mechanism would also support the decarbonisation of steel production, as it would allow steelmakers to produce low-emission steel without being out-competed by high-emission, lower-cost imported steel.

“The green energy revolution presents a huge opportunity to build a robust British supply chain based on the supply of top-quality domestic steel.”

We need answers today. I hope the Minister will update us on her engagement with Tata, British Steel, Liberty Steel and Celsa Steel. I hope she will acknowledge that the current level of support for UK steelmakers in respect of energy costs and decarbonisation is not enough, and I hope the Government will commit to doing much more. The era of warm words has bitten the dust and the time for meaningful strategic action has come. Just like levelling up, the industrial strategy part of the Department for Business, Energy and Industrial Strategy’s title should not just be a handy buzz phrase; it should be a central, defining mission of the Government.

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15:18 Nia Griffith (Labour)

In the interests of saving time, I will not repeat the excellent points that my hon. Friend made on the energy issue. Energy costs are not just an immediate challenge. Now is very much decision time for the future of the steel industry. The US Inflation Reduction Act and President Biden’s determination to tackle climate change have undoubtedly accelerated global interest in decarbonisation, which poses huge challenges for the steel industry. Our steelmaking capacity is ageing, and now is crunch time for steel manufacturers, which must decide where they will invest for the future—whether it will be the UK or elsewhere.

We know that blast furnaces cannot simply be replaced by electric arc furnaces. Yes, they have a role, and could clearly be run on electricity generated from renewable sources, but the real challenge is to decarbonise the blast furnace process of making steel from iron ore. That requires huge investment in research and innovation to develop the technologies of the future. The UK Government need to make the conditions right for companies to choose the UK. We need a clear vision from the UK Government, and determination to ensure that the UK gets ahead of the game and develops the technologies. We have to be prepared to take the risk in order to reap the gains. If the UK can lead the way, we will have not only a flourishing steel industry, but the opportunity to export our steel and our technologies.

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15:23 Tim Farron (Liberal Democrat)

I will focus on the role of steel in making Britain a sustainable economy. Steel plays a massively significant role in our ability to extend the railways, to ensure we have the green technology to build zero-carbon homes, and to make best use of the natural resources in this country—wind and particularly hydro power, which I will talk about in a moment. But while it is vital to the greening of our economy, we cannot ignore the fact that steel produced with coal is a major contributor to climate change. The steel industry contributes 5% of the EU’s carbon emissions and 7% of global carbon emissions, equivalent to the entire aviation industry. To cut to the chase, the good news is that the amount of steel produced using coal is now down to 70% and that produced by renewable means, in particular using electric arc furnaces, is up to 30% and rising. Increasingly, customers for steel are demanding that it be produced in green and renewable ways: for example, Volvo is now committed to building 100% of its trucks in a fossil-free environment.

Steel is vital to our green economy. As Britain decarbonises with new infrastructure based on steel, let us make sure that we also decarbonise the processes we use to make that steel.

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15:26 Christina Rees (Neath) (Ind)

Floating offshore wind has the potential to transform the economy and jobs market in my hon. Friend’s Aberavon constituency and across south Wales, but it will happen only if floating offshore wind substructures and other components are manufactured and assembled locally. The public know we need a Britain that can stand more firmly on its own two feet, and they recognise the need for foundational industries to thrive if Britain is to prosper. Indeed, in one recent poll, 80% of those surveyed declared steel to be a strategically important industry that we must maintain in the UK. That is why the Labour party’s green prosperity plan will marry the quest for sustainable growth and jobs on which people can raise a family with the need for resilience. Net zero should be seen not as a hindrance, but as an opportunity for growth and prosperity. Labour’s proposed green steel renewal fund will secure the future of the steel industry for my hon. Friend’s constituents and mine, who live in Neath and work at Tata Steel. By greening our steel processing, Labour will ensure that our steelmakers can compete in a world in which global steel demand is on the rise. Britain needs its steel as a foundation of the modern manufacturing renaissance that Labour will deliver.

Time is running out for the future of our steel industry. I know that the Minister, who is a very magnanimous person, is working around the clock to familiarise herself with her new brief. I am grateful that she has already met the members of the all-party group for steel and metal-related industries, and I hope that she will stay a while in her new role. I urge her, however, to impress on the Treasury the importance of investing in decarbonisation of the UK steel industry, and particularly Tata Steel in Port Talbot. Without serious UK Government investment now, I fear that Tata Steel in Port Talbot is on the cliff edge.

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15:48 Nus Ghani (Conservative)

As we know, steel contributed £3.8 billion to the UK economy in 2021. It is crucial to many downstream sectors, such as construction, automotive and our green energy revolution, all of which sit in BEIS. I take care of automotive, aviation, maritime and construction, so it is critical to the rest of my brief. The industry provides a critical foundation that underpins our manufacturing, energy and infrastructure sectors, with a proud history forged in our United Kingdom.

However, as we have heard today, we have to recognise that there are global pressures. The sector is under stress everywhere. This is not just a UK issue; there are global challenges exacerbated by global overcapacity and the need to decarbonise. The hon. Member for Cardiff South and Penarth asked about the oversupply issue. Through the global forum on steel excess capacity, the G20 and other interested nations agreed important policy principles and recommendations to tackle the unfair subsidies that we believe are the cause of overcapacity, and we continue to work together to find solutions to this challenge.

We are disappointed that not all major steelmaking economies are taking part in these discussions, and I call on all players to come back to the table—in particular China, which represents more than half of all steelmaking capacity in the world. There are also great opportunities in how we can use steel as we transition to a zero-emission economy and help our other great industries to transition as well.

The hon. Lady mentioned the CCUS infrastructure fund. Each site is at a different stage when it comes to decarbonising, but that is £1 billion. There is funding of £240 million through the net zero hydrogen fund, which I know is important to many Members present; £55 million through the industrial fuel switching fund; £20 million through the Industrial Decarbonisation Research and Innovation Centre, which provides capital funding to projects that support fuel switching to hydrogen on industrial sites; £289 million through the industrial energy transformation fund to help businesses with high energy use, including steel; and £66 million as part of the industrial strategy challenge fund. Those budgets are in place to help the steel sector in the long term. They are not short-term sticking plasters, but substantial amounts of money.

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