A high-tech, high-cost compromise is emerging as the only potential solution to the UK’s steel dilemma: a Direct Reduced Iron (DRI) plant powered by “clean hydrogen.” This is the government’s only apparent way to deliver on its two conflicting promises: a green transition and the retention of “primary steelmaking.”
Business Secretary Peter Kyle has backed electric arc furnaces (EAFs), which are clean but can only melt scrap. This breaks a 2024 pledge to save the UK’s “primary steelmaking” ability, which comes from blast furnaces.
The DRI plant is the proposed fix. It would use hydrogen to process iron ore into a form that EAFs can melt, allowing for the creation of new, virgin steel with “much lower carbon emissions.”
However, this “perfect” solution has a major flaw: “industry sources have cast doubt on the financial viability of such an arrangement.” This is not a cheap, bolt-on solution; it’s a massive, new industrial plant in its own right, using an energy source (green hydrogen) that is not yet widely or cheaply available.
This viability question is made worse by the state of the government’s £2.5bn steel fund. With “hundreds of millions” already spent on bailouts, funding this “dubious” hydrogen gamble looks increasingly unlikely, forcing the government to choose which promise it’s willing to break.