Ministerial foreword

Steel is critical to the modern economy, and the economy of the future.  

The central mission of this government is growth. Steel can, and will, have an enormous role to play in driving that growth. As well as supporting our mission of making the UK a clean energy superpower, steel is a fundamental component in activities such as the construction of wind turbines, manufacturing the next generation of electric or autonomous vehicles, or building the infrastructure needed to sustain our digital economy.

Whether in the skyline of buildings in our cities, the train lines that bring us closer together, or the pylons and pipes that sustain our modern way of life – you can see how widely steel is used.

As we manufacture, using steel, we can generate jobs, innovate new products, create trading opportunities and support an enormous range of our manufacturing base which is critical to the economic growth of this country. This is the case in the growth markets identified in the industrial strategy, where we have the greatest possible opportunities to drive economic growth. Particularly in advanced manufacturing, clean energy industries and defence. For example, it is estimated that offshore wind alone will require 25 million tonnes of steel – primarily plate steel – out to 2050. This represents a potential £21 billion market for UK steel. ^{[footnote 1]}

The government has committed to delivering 1.5 million homes over this parliament. This too will accelerate the use of industrialised construction and offer new demand for steel providing opportunities to the industry.

We must seize on these growth opportunities. Both to ensure a thriving and long-term future for the steel sector and to best support the wider ambitions for our manufacturing capabilities as a nation.  

The UK has unique advantages that the steel sector can capitalise on.

With an increasingly decarbonised electricity supply, and increased use of scrap steel in production, the UK industry is well-positioned to be at the forefront of the global transition to green steel. We should be able to capture a share of the growing market for low-carbon products and can continue to champion decarbonisation without deindustrialisation. At the same time, our world-leading research and development capabilities offer opportunities to specialise and innovate.

Despite the complex international environment, I believe that we can create a vibrant steel sector in the UK and the steel strategy will help to deliver this goal. It will bring together action from across government to establish a clear plan to attract new investment and create a productive, competitive business environment.  

But growth and delivering the steel sector that the UK is capable of cannot be achieved by government alone.  

While we work at speed to bring together policies and financial support that help move the sector into a brighter future, it is those who drive the industry of the day – investors, businesses, wider experts, workers and the communities that surround them – that will:

• inform which goals should be prioritised 
• Identify where support should be targeted 
• Implement the necessary changes  

That is the purpose of this consultation, to seek the views of those closest to the real needs of the sector.  

The steel strategy – the plan for steel – will need to go beyond words and implementing it must achieve real change so that we can have a thriving and competitive steel industry, which in turn will contribute to wider economic growth and high-quality jobs. Achieving this needs everyone to play their part.  

I urge you to help us deliver this by responding to the questions set out in this consultation.  

With these insights in hand, and the support of our partners in the steel sector, we will publish the plan for steel in spring 2025.

The Rt Hon Jonathan Reynolds MP
Secretary of State for Business and Trade

Executive summary

Steel is essential for a modern economy, underpinning many sectors, from construction to advanced manufacturing.  

As sectors such as advanced manufacturing or clean energy industries grow, real opportunities exist to build a thriving steel sector that is an important part of the supply chain for a wide range of economic opportunities. Action is required to best position the industry to exploit these opportunities.  

The plan for steel will be our plan to support the sector to best exploit available opportunities to deliver long-term growth. It will be pursued in alignment with wider priorities, including the trade strategy, strategic defence review and Invest 2035, the upcoming industrial strategy.  

The intention is that the steel strategy will establish a clear and ambitious long-term vision for the steel industry and set out the actions needed to get there. It will articulate what is needed to create a competitive business environment in the UK with the aim of attracting new private investment to expand UK steelmaking capability.  

To support this the government has committed up to £2.5 billion through the National Wealth Fund (NWF) and other routes. This is in addition to the existing £500 million investment in the building of an electric arc furnace (EAF) at Tata Steel UK’s Port Talbot site. 

In developing the strategy, we are exploring opportunities and challenges which could have the biggest impacts for our steel industry, including: 

• financial support – identifying support for investment opportunities to support the steel sector through up to £2.5 billion of funding and finance
• primary production – assessing the viability of technologies for the production of primary steel, including direct reduced iron (DRI), with a commissioned independent review delivered by the Materials Processing Institute
• identifying future market opportunities – improving understanding of the future demand for steel and the opportunities for investment in increased steelmaking capabilities
• stimulating demand for domestically produced steel – exploring opportunities to best position the UK sector for success in bidding for, and securing, UK contracts across the public and private sectors
• timely availability of suitable sites – how to mitigate and support companies to overcome barriers to investment
• scrap – how to best use and improve the UK’s capability in scrap metal processing, in light of the transition to EAFs
• trade and overcapacity in global markets – how to protect the sector against risks posed by fragmentation and countries engaging in unfair trading practices, how to respond to the challenges presented by overcapacity in the global market and the international responses to this problem, and how to provide a fair and level playing field while balancing the needs of the UK steel sector
• electricity prices – understanding the influence of electricity prices on the competitiveness of the steel sector in the future
• green steel – how the sector should continue to play a role in the UK’s decarbonisation mission, whilst ensuring that decarbonisation does not mean deindustrialisation
• carbon leakage – how to best prevent carbon leakage
• research, development and innovation (RDI) – how to best use the UK’s world-leading research and development capabilities to benefit the steel sector
• workforce and skills – how to ensure the sector can attract and retain talent with the right skills

Issued on

16 February 2025

Respond by

11:59pm, 31 March 2025

Enquiries to

steelstrategy@businessandtrade.gov.uk

How to respond

Online

To help us analyse the responses, use the online system wherever possible.

By email

steelstrategy@businessandtrade.gov.uk

By post

When responding, state whether you are responding as an individual or representing the views of an organisation.

Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome.

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Quality assurance

This consultation has been carried out in accordance with the government’s consultation principles.

If you have any complaints about the way this consultation has been conducted, email enquiries@businessandtrade.gov.uk.

Introduction

This consultation sets out our planned approach for the government’s strategy and asks for your feedback and evidence on a range of topics. We are seeking your views on both the wider direction that the UK steel sector should take and the detail of the proposed areas of focus for the strategy.

Specific questions are set out throughout this document and answers can be provided online.

It also provides further information for businesses who wish to explore investment opportunities in the UK, who are encouraged to contact steelstrategy@businessandtrade.gov.uk in the first instance.

This information will be reviewed as we develop the steel strategy, and will be reflected in the final strategy, to be launched in spring 2025.

Context

Steel is essential for the modern economy. It has no viable substitutes that can match its unique properties of strength, durability and versatility. Because of this steel is critical as an important element of almost all infrastructure and construction and an essential part of a broad range of manufacturing supply chains. Steel is used for the construction of our homes and in a wide range of production, from railways to cutlery.

In 2023, the UK steel industry contributed £2.3 billion to the UK economy in terms of gross value added (GVA) ^{[footnote 2]} and it currently plays a vital role in the communities in which it is situated. On average, the UK steel sector pays 38% higher than the local median wages and is often located in lower income areas. ^{[footnote 3]}

There are important opportunities for the steel sector in the UK. The UK currently has a demand for steel of around 9 to 11 million tonnes a year, ^{[footnote 4]} including in applications which form a vital part of the supply chain for the growth-driving sectors identified under the industrial strategy.

Advanced manufacturing, aerospace and automotive are among the sectors that spend most on steel input. For example, in automotive manufacture, on average, there is 900kg of steel per vehicle. ^{[footnote 5]}

Steel demand in manufacturing can also have important implications for defence and critical infrastructure. Downstream sectors produce, for example, ships, aerospace and nuclear products with national security implications. Around 36,000 tonnes of steel was required in the 2022 to 2023 financial year for UK public procurement for defence. This accounted for around 10% of total public procurement (by volume). ^{[footnote 6]}

The transition to a green economy will demand significant amounts of steel, particularly in renewable energy infrastructure such as wind turbines and solar panels. ^{[footnote 7] [footnote 8]} Steel accounts for more than 80% of the material required to produce a wind turbine, primarily monopiles and towers, requiring various products, such as plate, electrical steel, wire and, tubes. It is estimated that offshore wind alone will need around 25 million tonnes of steel – primarily plate steel. This represents a potential £21 billion market for UK steel out to 2050. ^{[footnote 9]}

The transition from aging blast furnaces to primarily EAFs brings with it the opportunity to develop innovative products and processes, invest in modern efficient plants and capitalise on the UK’s potential in scrap metal processing. At the same time, the UK’s leading status in decarbonising its electricity grid brings an opportunity to capitalise on the growing market for low-carbon products ^{[footnote 10]} by ensuring the supply of UK-produced green steel is more competitive than carbon-intensive imports.

The UK’s RDI sector is world leading. This is critical for delivering the vibrant and innovative steel sector of the future. This transition also gives us reason to explore strategic questions around the direction of the sector, such as the need for and viability of primary production in the UK and how we ensure the right jobs, skills, processes, products and supply chains, to meet our future needs and opportunities.

Ensuring that these opportunities can be exploited will take action to address challenges faced by the sector and help to overcome any barriers to further investment. As set out in this paper, this is expected to take the form of both financial support and adjustments to the policy environment to support productivity, UK competitiveness and investment.

We must take a positive and proactive approach to forming a steel strategy that can bring about meaningful change, best address challenges to support UK producers, and exploit opportunities to expand the UK industry and support economic growth.

The purpose of the steel strategy

It is this context that is driving the development of the steel strategy and we plan to implement measures to support the sector, encourage investment and best align the capabilities of the UK steel sector with the demand of domestic supply chains.

The objectives of the steel strategy will be to:

• examine how the government can increase steel capacity and capability in the UK, and establish a clear and ambitious long-term vision for the steel industry, in partnership with business and workers
• set out the actions needed to achieve that vision
• identify gaps in current capabilities
• assess future UK steel demand, helping to inform investment decisions which will support economic growth
• articulate what is needed to create a competitive business environment in the UK with the aim of attracting new private investment to expand UK steelmaking capability and capacity

The strategy will complement the government’s industrial strategy and growth mission, which aim to fix the foundations of the UK economy and kickstart a decade of national renewal to drive growth and to deliver on the mandate to rebuild the UK. The strategy will move away from a reactive government approach to the steel sector towards one of partnership between government, businesses and workers, where private business, entrepreneurship and innovation are at its heart, with government playing a strategic and coordinating role.

Our focus is on long-term, sustainable growth that will deliver benefits to communities across the UK.

The steel strategy is being developed in partnership with the steel sector, trade unions and other interested parties. We are also committed to working collaboratively with the devolved governments in Scotland, Wales and Northern Ireland. That is why we have re-established the Steel Council, which brings together leaders from across the sector, including businesses and unions, as well as the devolved governments, to provide strategic guidance and external expertise in the development of the steel strategy. Following publication of the strategy, we will continue to convene the council throughout this Parliament to drive implementation and results.

UK government priorities

The steel strategy is part of our wider commitment to drive economic and sustainable growth. The steel strategy’s objectives will sit in parallel, and in partnership, with a variety of strategies, to be published in 2025. These are as follows:

Industrial strategy

The new modern industrial strategy – Invest 2035 – is our 10-year plan to deliver the certainty and stability businesses need to invest in the high-growth markets that will drive our growth mission.

The steel strategy will complement the industrial strategy. It will clearly link our ambitions for the steel industry to the wider growth objectives of the industrial strategy, while remaining a separate publication that responds to the unique challenges and opportunities within the steel sector.

Trade strategy

The Department for Business and Trade (DBT) is developing a trade strategy, aimed at achieving long-term sustainable, inclusive, and resilient growth through trade. The trade strategy and the steel strategy will complement one another, and the trade strategy will set out the range of levers that are available to support UK businesses, including the steel industry.

Strategic defence review

The Ministry of Defence (MOD) is currently undertaking an independent strategic defence review alongside the development of a defence industrial strategy. These will inform our understanding of future steel demand, alongside other critical raw materials used in defence sector industries, to ensure that we better understand the defence requirements and take action to de-risk supply chains where possible.

Infrastructure strategy

HM Treasury (HMT) is developing a 10-year infrastructure strategy that will outline our approach to our core economic infrastructure like transport, energy and housing, and, for the first time, will also profile our social infrastructure plans for the schools and hospitals which support a flourishing modern economy. Such infrastructure will need steel so we will work to ensure these two strategies are aligned.

Long-term housing strategy and construction products reform

The Ministry for Housing, Communities and Local Government (MHCLG) is developing a long-term housing strategy which will set out a vision for a housing market that works for communities, builds 1.5 million high-quality homes, and provides the biggest increase in affordable housing for a generation.

To deliver on this ambition will require growing the availability of safe construction materials and increasing the use of modern methods of construction. This will be supported by MHCLG bringing forward comprehensive proposals for system-wide reforms to the construction products regime, giving consumers confidence and underpin supply chains and housing delivery system. With steel being an important modern building material, this work will be conducted by working closely with the steel industry and aligning with the steel strategy.

Meaningful change for the steel industry

The steel strategy will take a broad approach to identifying the actions needed to drive meaningful change. This means working across government, and in partnership with the private sector, to respond to the most pressing challenges facing the industry and seize the opportunities for future development and growth within the sector. This section sets out where we understand these opportunities and challenges lie.

Some policy areas are devolved. As we move towards finalising the steel strategy we will work with devolved governments to discuss how the proposals can best be reflected in each jurisdiction.

Financial support

We have committed up to £2.5 billion to support the steel sector to increase steelmaking capability in the UK. This is in addition to the £500 million already committed in September 2024 for Tata at Port Talbot steelworks.     

Finance    

The NWF will catalyse private capital in the UK’s world-leading clean energy and growth industries and support the delivery of our new industrial strategy. The NWF can use catalytic capital with higher levels of risk appetite to provide a broad range of financing tools across the capital structure – including senior loans, first loss and mezzanine debt, guarantees and equity investments.     

At least £5.8 billion of the NWF’s capital will concentrate on the sectors announced in the manifesto: green hydrogen, carbon capture, ports, gigafactories and green steel. The NWF is operationally independent of the UK government and makes its own investment decisions. All investments must meet its investment principles.      

Funding    

Recognising the specific requirements of the steel industry in relation to funding, and the support available in other countries, we are also considering other mechanisms to help achieve our vision for the sector. This includes grant funding. We will provide further details in the steel strategy when it is published in spring 2025.

Investment opportunities   

Support for future investment will be aligned to meet the strategic goals that best support a thriving and future-facing industry. To this end, as set out further in this paper, we are seeking to identify future market opportunities to ensure that our capabilities grow in line with our domestic demand. Investment decisions will be made in alignment with these opportunities. We would therefore like to talk to companies that can support our ambitions for the sector and seize future growth opportunities, by investing in the UK.   

To explore these opportunities further, email us at steelstrategy@businessandtrade.gov.uk. To support any conversations about accessing funding you may wish to consider producing a business case for your project, including estimated total costs. More information on the type of approach that government takes on business cases is available. ^{[footnote 11]}

Primary production review

With the iron and steelmaking infrastructure now being decommissioned at Port Talbot in readiness for the new EAF, British Steel’s Scunthorpe steelworks are now the last operating blast furnaces in the country.  

EAFs can produce an increasingly large range of steel products and grades and can do so by making use of our abundant supplies of scrap. This reduces our reliance on imported raw materials.  

Any end to primary steel production does not mean there cannot be new forms of primary production in the UK in the future. We want to see new technologies being developed and built here in the UK, but only where there is a strong business case for investment.  

We need a better understanding on the viability of primary steel production technologies in the UK to inform our future approach to primary production and any potential investments. The viability of investing in primary production is complex and requires a detailed understanding of:   

• the availability of the input materials for EAF and blast furnace- based production 
• the future demand for steel products in the UK 
• the products that can be made from different production techniques 
• whether or not it is better to import such products or make them domestically  

The technological changes we are seeing mean there are new options for primary steelmaking in the future which should also be considered.   

To inform our long-term future strategic approach to primary production, we have asked independent experts from the Materials Processing Institute (MPI) to review and provide a recommendation on the viability of primary steelmaking technologies in the UK, including DRI.

This primary production review will:      

a) consider and provide cost models, including with international comparisons, for the following technologies:
      i. DRI, including with low-carbon hydrogen  
      ii. new blast furnaces plus carbon capture, utilisation and storage (CCUS)   
      iii. other emerging technologies which could be commercially viable 
b) consider the achievable conditions needed to make production effective and competitive within the UK  
c) take into account supply chain, energy, environmental and commercial considerations

The primary production review is being taken forward during the first quarter of 2025 and will inform the steel strategy. The MPI team can be contacted by emailing mark.allan@mpiuk.com and terry.walsh@mpiuk.com.

Identifying future market opportunities

Understanding the UK’s future need for steel is a crucial part of the evidence gathering for the steel strategy and we know that there is great potential for investment in the steel sector here in the UK.   

By mapping what we expect the potential future demand for steel to be, we can better identify the UK’s production and downstream processing capability gaps and target investment to best support the industry, to seize opportunities and future-proof the sector.

While there is already a wide range of existing supply chains for steel, including defence, construction and advanced manufacturing, there are a number of areas which mean the UK’s demand for steel is likely to increase in the coming years. These include ambitious targets for renewable electricity generation – including offshore wind and solar – as laid out in the Clean Power 2030 Action Plan, including planning reform to boost construction upgrades to the electricity grid.  

We seek to understand demand throughout the supply chain, from raw materials through to the end use. This will enable us to identify where there are real opportunities to invest, challenges to overcome and how investments can best support the UK’s steel-using industries – maximising the benefits of any investment to the UK economy overall.  

As we move forward, we would appreciate views and evidence on the UK’s future demand for steel and investment opportunities for the UK market from a wide range of stakeholders.

Stimulating demand for domestically produced steel

At the same time as assessing future market opportunities, we are considering opportunities for ensuring the UK steel sector is well-placed for success in bidding for and securing UK contracts.

UK government public procurement

With a total annual spend of £407 billion on goods, works and services during the 2023 to 2024 financial year, public procurement is a powerful lever to drive national renewal. ^{[footnote 12]} Procuring domestically creates jobs, and new market opportunities for UK- produced products and materials. This is particularly relevant for steel, which can play a significant role in publicly procured projects such as construction and infrastructure.

According to the World Steel Association, the UK uses an estimated 9 million tonnes of finished steel per annum. With the UK government procuring over 445,000 tonnes of steel in the 2022 to 2023 financial year, this volume represents around £472 million in market value. ^{[footnote 13]} Based on UK government departmental returns for the same year, around two-thirds of steel products procured by the UK government were UK-made.       

The Procurement Act and the National Procurement Policy Statement (NPPS), which come into force in February 2025, will simplify public procurement rules and set out the strategic priorities for public procurement aligned to the government’s missions, including the industrial strategy. Contracting authorities will be able to set rigorous environmental and social standards, and other criteria, with strengthened rules on pre-market engagement to provide better information and signalling about future opportunities.

Government supported projects

Outside of government procurement, there are opportunities for steel in wider government-supported projects, especially in low-carbon energy generation, such as nuclear and wind. Some of these energy generation projects, such as offshore wind, benefit from the Contracts for Difference (CfD) revenue guaranteeing scheme. In turn, for the auction round launching this year, offshore wind CfDs can apply for the Clean Industry Bonus (CIB), ^{[footnote 14]} which offers extra CfD revenue to applicants who choose to invest in the economic, social and environmental sustainability of their supply chains. This could create opportunities for UK steel producers.

Private sector

The majority of domestic demand for steel products sits within the private sector. During our stakeholder engagement on the steel strategy, we will engage with companies that use steel to explore how to strengthen domestic supply chains, while exploiting any mutual benefits for steel producers and downstream businesses. This will include considering whether there are any synergistic benefits with the wider industrial strategy, for example in the advanced manufacturing sectors.

Timely availability of investible sites

In order to secure new investments, projects will need to have access to suitable sites with the necessary infrastructure, electricity grid connections and planning permission secured.  

We are aware that the current planning regime acts as a major brake on economic growth, which is why we are making changes to fix this, including:

• fast tracking critical infrastructure projects 
• simplifying parts of the planning system holding projects up such as reforms to the statutory consultation system
• replacing environmental impact assessments with environmental outcomes reports to support growth

Alongside this, we are taking steps to address delays in securing timely grid connections. These include Ofgem laying out a series of proposals ^{[footnote 15]} in 2024 to overhaul the system for connecting new projects to the electricity system. In addition, reforms to the connection queue, due to go live in 2025, benefit the steel industry through accelerated connection offers for existing applications and shorter connection timelines for new applications. ^{[footnote 16] [footnote 17]}

We recognise that the timely availability of large strategic parcels of land – with suitable transport links and other infrastructure to accommodate industries like steel production – is also a challenge for investors.

The Office for Investment (OfI) supports large scale investors to navigate complexities around planning, grid and site assembly changes. OfI is exploring how government can best identify, select and intervene in industrial sites across the UK to realise ambitious proposals. Alongside this, it will continue to closely monitor international best practice and the action of peer governments in this space, as we recognise the need to do more, go further and deliver solutions at pace.    

We would appreciate views and evidence from a wide range of stakeholders on these issues and the potential options to address them.  

Scrap

As identified, we anticipate that the future of steelmaking in the UK will be primarily EAF-based, requiring an increase in the volume of high-quality scrap. Current demand for scrap (around 2.6 million tonnes a year ^{[footnote 18]}) is significantly lower than the supply (around 11 million tonnes a year ^{[footnote 19]}) and it is expected to remain lower following the move from blast furnaces to EAFs. ^{[footnote 20]}     

Much of the supply is currently only processed to a basic level for use in EAFs that make commodity steel products, mainly rebar, which can tolerate low scrap quality. By contrast, as EAFs replace blast furnace production, production of high-quality steel products that have a much lower tolerance to residual elements – especially copper – will require higher quality scrap or will need to be supplemented with virgin iron products. ^{[footnote 21]}

To remove these residual elements, scrap flows will have to be processed to a higher level through innovative new processing techniques and technologies. Improved scrap processing also offers an opportunity for EAF producers to rely less on virgin iron products, such as pig iron or hot briquetted iron. While valuable to steel production, these iron products can be costly and result in higher carbon emissions than scrap. As such, supplementing them with a strong supply of low-residual scrap is critical to reducing the carbon intensity of UK-steelmaking and reducing the production cost of UK-made steel.  

However, industry suggests the current market does not encourage the processing of sufficient quantities of high-quality scrap material in the UK and that many shredders are under-used.

We are therefore seeking to understand how far there is a need for government intervention to support the metal recycling sector to change to meet all the scrap needs of a modernised domestic steel sector. While some areas, such as waste regulation, are the responsibility of devolved governments, UK Steel has proposed a number of recommendations for UK government action, including export controls, innovation support, and packaging policy reform. ^{[footnote 22]}  

As well as supporting steel production, development in this area has the potential to unlock economic growth in the scrap industry itself, either in standalone businesses or where scrap processing is vertically integrated into the business model of steel producers. Metal recyclers have also made recommendations to government, including on end-of-life-vehicles, tax, and electricity prices.  

We would also like to hear from other scrap processors at different stages of the market, steelmakers, innovators and academics on what policy steps, if any, the UK government should consider adopting to support the metal recycling market to work more effectively for all stakeholders. 

Trade and overcapacity in global markets

Trade is a vital yet complex aspect for the UK steel sector’s growth and development. In 2023, total steel exports generated £4.6 billion for the steel industry and steel will remain a highly trade-exposed commodity. ^{[footnote 23]} In this context, fair and open international trade is critical to ensure that UK companies operate in a competitive business environment that will help drive long-term secure growth.  

However, we must acknowledge the market-distorting practices abroad that have driven significant overcapacity in the steel industry, creating challenging trading conditions for the UK sector. According to the OECD, in 2023 the gap between global steel production capacity and demand was 551 million tonnes – around 45 times the UK’s steel production capacity for the same period. ^{[footnote 24] [footnote 25]} OECD research has shown that this overcapacity negatively impacts domestic steel industries by pushing down prices, which risks harming profitability and hindering essential investments in modern and lower-carbon technologies. ^{[footnote 26]}  

Overcapacity also threatens the market share of domestic steelmakers as unfairly cheap imports capture a larger portion of the market. An increasing dependency on exporting nations impacts our economic sovereignty and makes the UK more vulnerable to future price increases, supply chain disruptions and geopolitical tensions. This has potentially significant economic and security ramifications that highlight the need for a steel strategy to continue to support the competitiveness of a UK based sector, and ensure a domestic supply that prevents a continued or increased reliance on imports.

Strengthening the UK steel industry’s position will be important for unlocking growth for the sector and beyond. Trade remedies are one way that the government has taken steps to protect businesses under World Trade Organization (WTO) rules from the harm caused by dumping, unfair government subsidies, and unforeseen import surges. The UK currently applies 17 trade remedies measures against steel products. This includes a safeguard on certain steel goods, but this measure must expire in mid-2026, in line with our WTO obligations.  

We recognise that the actions of others to tackle overcapacity can affect our own steel sector. The government will continue to collaborate closely with like-minded nations, bilaterally and across various international forums, to monitor global trade distortions and take collective action to tackle steel overcapacity. This includes efforts at the G7, WTO, and the Global Forum on Steel Excess Capacity, which the UK chaired in 2024.  

The government is working with industry to develop an approach that protects our interests against risks posed by market-distorting practices. Embedding resilience in key steel supply chains and ensuring wider measures are in place that support the sector’s long-term sustainability is crucial to this. We are keeping all trade options under review to support our critical steel sector against risks posed by fragmentation and countries engaging in unfair trading practices.  

Given that approximately 41% of production from major UK steelmaking sites was exported in 2023, ^{[footnote 27]} and that the UK relies on imports to fill supply chain gaps, it is essential for industry to have the stability and confidence needed to navigate the complex global steel trade landscape. Through the steel strategy, alongside work underway as part of the trade strategy, we will explore the best ways to support industry, including through maintaining market access, minimising trade barriers and facilitating robust supply chains.

We recognise the need for a competitive and fair business environment, that balances needs across the sector, to achieve a bright future for the critical UK steel industry. As we move forward, we would appreciate views and evidence from a wide range of stakeholders on these issues and the potential options to address them. 

Electricity prices

Throughout the supply chain, the steel sector uses a lot of electricity. This is expected to further increase with the transition from blast furnace to primarily EAF production. We recognise the concerns raised by the sector regarding electricity prices ^{[footnote 28]} along with the progress made over the recent years.  

The average industrial electricity prices in the UK for very large users are currently higher than key competitors. ^{[footnote 29]} Because of their importance for investment decisions for the sector, there is a need to understand the extent to which electricity prices will be an issue in the future, particularly given the action already taken by government and the fact they are expected to decrease. We understand this is a complex policy landscape with various policies and future decisions and recognise that different parts of the steel supply chain will be impacted by policies in different ways. 

We are committed to minimising electricity costs for steel, and all energy intensive industries (EIIs), as far as possible to help ensure they remain strong and competitive. This is why the government has implemented and announced a range of ambitious policies to continue to support industry to reduce costs. 

Through the EII compensation scheme, the government compensates eligible energy intensive businesses for up to 100% (or 1.5% GVA) of the indirect costs incurred by the UK Emissions Trading System and the Carbon Price Support Mechanism in their electricity bills.  

In the budget on 30 October 2024, continued funding of the scheme was announced through to March 2026. Additional support through the British Industry Supercharger should be worth around £24 to £31 per megawatt hour for the sector. ^{[footnote 30]}

In December 2024, the government published the Clean Power 2030 action plan, which sets out a pathway to a clean power system, with at least 95% of the electricity grid powered by low-carbon generation by 2030. 

The government also published the update on the review of electricity market arrangements (REMA) programme, alongside the summary of consultation responses to the second REMA consultation. REMA aims to identify the exact reforms needed to transition to a decarbonised, cost effective and secure electricity system. The government will assess the impacts of the options for reform on the steel industry and other EIIs.  

As we move forward, we would appreciate views and evidence from a wide range of stakeholders on this issue and the potential options to address them. 

Green steel

Globally there is a growing market for green steel, which is projected to grow from around $4 million in 2023 to around $130 million by 2032 ^{[footnote 31]}, driven by increasing consumer demand and policy measures, including those in export markets such as the EU Carbon Border Adjustment Mechanism (CBAM). Decarbonisation of the UK steel sector means there is an opportunity for the UK to have a real competitive advantage in this space.  

This process is already well underway, with the ongoing transition by UK producers from traditional blast furnaces to EAFs and Tata Steel’s transformation project expected to reduce the UK’s overall CO2 emissions by around 1.5%. ^{[footnote 32]}  

There are potential opportunities to decarbonise the sector further using resource efficiency, energy efficiency, fuel switching and innovation. Measures are currently in place to help support the sector to further decarbonise.  

The steel sector has had access to the Industrial Energy Transformation Fund, which was aimed at helping high-energy-use businesses cut their energy bills and carbon emissions through investing in energy efficiency and low-carbon technologies. It also had the opportunity to benefit from the Hydrogen Production Business Model and the Net Zero Hydrogen Fund, which aimed to support the commercial deployment of new low-carbon hydrogen production projects during the 2020s.

We have also announced the establishment of a Circular Economy Taskforce, aiming to move towards zero waste, under which steel waste will be considered.  

The opportunities offered by future markets means the government’s commitment to supporting the steel sector to decarbonise does not mean deindustrialisation. It means aligning our actions on decarbonisation with our ambitions to support economic growth.

In December 2023, UK government announced its intention to work with industry to establish product classifications – formerly known as voluntary product standards – for steel ^{[footnote 33]} and develop an embodied emissions reporting framework for industrial products, including steel.

Product classifications will provide the steel sector and its buyers with a framework to compare products based on their embodied emissions intensity. This could provide a foundation for future demand-side policies such as the development of green procurement guidance and product labelling. These policies aim to strengthen the demand for low-carbon steel by helping buyers make greener purchasing decisions, subsequently encouraging the steel sector to adopt and scale up the production of low-carbon steel. We will consult on these policies further in 2025. 

A global need for decarbonisation can also drive economic opportunities, particularly as the steel sector supplies a wide range of downstream sectors across the UK. As such, there is an opportunity to produce green steel to further government’s Growth and Clean Energy Super Power missions.  

Carbon leakage

Carbon leakage refers to the movement of production and associated emissions from one country to another due to different levels of decarbonisation effort through carbon pricing and climate regulations. UK steel production is at high risk of carbon leakage as the steel sector is both highly carbon and trade intensive. ^{[footnote 34]} This risks curtailing private investment in modern efficient low carbon production. ^{[footnote 35]}

We understand that ensuring effective measures against the risk of carbon leakage is an issue for the sector. The UK CBAM will place a carbon price on some of the most emissions intensive industrial goods imported to the UK from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors from 2027. This will ensure that a comparable carbon price is paid on imports to that paid if the good had been produced in the UK. 

To date, the risk of carbon leakage for the steel sector has been managed by providing free allowances under the UK Emissions Trading Scheme (UK ETS), as well as the EII compensation scheme to cover indirect ETS and Carbon Price Support costs from electricity generation. The government has announced plans to introduce a UK CBAM in January 2027 to mitigate the carbon leakage risk.     

There are decisions that still need to be taken regarding various design and implementation components including the approach to adjusting free allocations within the UK ETS alongside the introduction of the UK CBAM. The UK ETS Authority is committed to better targeting ETS free allocations for sectors most at risk of carbon leakage ahead of the next allocation period, which will start in 2027, and to tailor this to the UK context.  

The UK ETS Authority consulted in 2023 on a range of changes to the free allocation methodology and launched a further interim consultation in December 2024 on the approach to carbon leakage under the UK ETS. The free allocation review: carbon leakage consultation seeks views on the UK ETS carbon leakage list and how free allocations for CBAM covered sectors should be adjusted. This consultation is open until  10 March 2025.

The government is also exploring the carbon leakage risk beyond the scope of existing or upcoming measures.

We note concerns raised by the steel sector about the risk of carbon leakage in export markets. The CBAM will apply to imported goods sold on the UK market. 

We recognise the importance of preventing carbon leakage to ensure that the steel sector is effectively decarbonised and has the appropriate support.  

Research, development and innovation

The UK has world-leading research, development and innovation (RDI) institutions that expand the possible and evolve new cutting-edge processes and products every day. From universities developing the genesis of a new idea to research centres working with companies to commercialise a new technology.  

The UK has the capability to take ideas from basic principles to successfully using them in industry on a commercial scale.

Centres such as the MPI in Teesside, who have recently celebrated their 80th year, are an important part of this capability. One of MPI’s recent programmes, PRISM – funded by DBT – has helped fund a number of upgrades to the centre’s capabilities and deliver projects with industry. They are home to UK’s only pilot scale steel processing facilities, including a 7-tonne EAF, allowing new processes and products to be trialled and perfected before being scaled up to the full production.

Also conducting work specifically on steel is Sustain, the Future Steel Manufacturing Research Hub, led by Swansea University, which has delivered a number of cross-sector projects including pioneering research into the metallurgical make up of our scrap supply. This project involved a collaboration with a number of partners including Tata Steel and metal recycler EMR, the results from this partnership are now supporting the transformation of Port Talbot to EAF steelmaking.  

The UK steel sector also benefits from the network of High Value Manufacturing Catapult centres such as Warwick Manufacturing Group (WMG) which works with steel companies both large and small. Having for some time been a key partner for RDI projects with Tata Steel, it is our understanding that WMG will take on the majority of steel production related research and development work that was previously done in-house.

UK universities have proven themselves capable of successfully spinning out new companies from research projects. A recent example is Cambridge Electric Cement, a start-up which is developing a process to recycle cement through EAF steelmaking. Due to Innovate UK, Cambridge Electric Cement has been able to run industrial scale trials. 

However, we recognise that there have been challenges in recent years and questions remain. In particular, there is a need to explore further whether projects can be effectively scaled and a need to maintain the knowledge and momentum of work when funding is granted with defined timeframes.  

Experts from the sector have raised that often revenue support is not available to maintain staff between blocks of funding.  

We know innovation is a critical factor to unlocking growth and boosting investment and that there are opportunities for academia, steelmakers, supply chains and downstream manufacturing to work together. These projects could drive a competitive advantage for UK businesses. For example, industry is increasingly interested in low-emission iron-making innovations. 

Innovation will bring new opportunities for steel firms in the UK and a thriving UK RDI sector will attract projects and investment from across the world. At the same time, innovation supports wider goals such as the transition away from highly polluting production methods in favour of electrification or alternative fuels such as hydrogen.

Similar challenges and opportunities from innovation exist in other sectors that share value chains with steel, such as cement, ceramics and chemicals.  

The success of recent programmes such as the Transforming Foundation Industries Challenge, which brought together academics and companies from across different sectors, shows that a collaborative approach can drive real change.  

We would appreciate views and evidence from a wide range of stakeholders on how to best support innovation and thriving RDI environment in the UK steel sector.

Workforce and skills

The steel sector currently provides high-quality jobs in deprived parts of the country, paying 38% higher than the local median wage. A competitive industry, which has transitioned to primarily EAF based production, will be able to provide good quality and secure jobs into the future. However, we understand that concerns about the future of the industry mean that some parts of the sector are currently struggling to attract and retain talent, particularly in highly qualified areas like engineering.  

A thriving steel sector, and one that encourages innovation and growth, cannot be achieved without a skilled workforce and investment in skills supports businesses to innovate, increase productivity, attract investment and supports economic growth by maintaining the sector’s global competitiveness. At the same time, the transition to primarily EAF based production means new skills will be required in some areas, and we must be forward looking and be willing to invest in a long-term pipeline for skills to best equip the UK sector for the future. As skills policy is devolved, we are also committed to working with devolved governments to best support the sector in this area.  

We would appreciate views and evidence from a wide range of stakeholders on the workforce and skills challenges faced by the industry, the potential options to address these and the opportunities in the space.

Next steps

This consultation is an important step in ensuring that the plan for steel is developed from a clear evidence base and delivers on the needs of the steel sector and its customers. Feedback received to the questions set out in this consultation will be reviewed comprehensively by DBT and accounted for in the published strategy.     

Responses to these questions can be provided to us by using our online form.

In parallel, the Secretary of State for Business and Trade has reconstituted the Steel Council, a leading body of businesses, trade unions, sector experts and Ministers, to support the development and implementation of the strategy. This group will continue to meet and consider issues relating to the development of the strategy, including responses to this consultation.  

Throughout the development of the steel strategy, we will continue to engage more widely with the steel sector, for example through ministerial and official-led roundtables, to ensure the recommendations align with the priorities of the sector.