Decision making on steel - kick that can

Much muttering is going on over what should be done about steel in the UK. The correct answer being nothing. At least, nothing yet.

The tasks of decarbonising the economy and securing supply chains do not come bigger than for the sprawling steel plant in Port Talbot in Wales.

For more than a century it has dominated the town as one of its largest and best-paying employers.

But the plant, one of the UK’s top carbon polluters, will need to find ways to make steel with less carbon dioxide output - eventually cutting it entirely in the race for net zero.

The challenge for loss-making parent Tata Steel UK is who will pay for improvements to achieve this. An inability to find the funds could put local jobs at risk.

It is possible that the UK really does need to be able to make its own virgin steel. So, scrap recycling with electric arc furnaces is fine but not exclusively. It is possible that it doesn’t so arc furnaces only would be fine.

That though isn’t the only question. There is a method - direct reduction - which is low to no carbon. It depends upon green hydrogen to work usefully. If we do get solar to electrolysis cheaply enough then DRI is the solution. If we don’t it ain’t.

So, what do we do now? We wait.

Which is where we really do insist that doing everything now is not cheaper than just waiting and seeing. Even, this is at the heart of why so many dislike the Nordhaus (you know, the Nobel winning manner of dealing with the problem) approach to climate change. This seeming detail:

Within the next 10 years, one of its two blast furnaces will need replacing, offering the opportunity to simultaneously implement a new system - giving time for new skills to be learned.

The Nordhaus approach is to work with the capital cycle. Don’t scrap perfectly usable stuff we’ve already got built. Wait until we need to replace it anyway then make sure that the replacement is the best - in this case least emittive perhaps - available option at that time.

Don’t tear down usable blast furnaces, tear down ones that need replacing anyway. At which point the begging letters for tax funding are easier to deal with because even if subsidy is still required it’ll only be the marginal cost of the new tech, not the total replacement cost. And, of course, we’ll know a great deal more about whether than green H2 is going to work properly or not in just a few years. If it really does - a reasonable guess being yes it will - then no subsidy will be required as it will the technology of choice anyway.

The general screaming and shouting at present is that we’ve got to do everything right now, today, by lunchtime even. The actual answer is that waiting for the capital cycle is correct. Don’t rip down stuff that works, just make sure the replacement, in its time, meets the new standards. Oh, and make that decision when that time comes, when we know which techs actually work at that point.