What Would It Take to Transition British Steel to Renewable?
Author: Freddie O'Shea Publish Date: April 14, 2025
Right now, in the heart of Scunthorpe, the fires of British Steel’s blast furnaces still burn coal to produce steel, a process unchanged for over a century. We recognise the vital role of steel in our economy. But we also believe that if we’re serious about building a regenerative future, we must take a clear-eyed look at what this transition demands, and why it matters.
Time to Confine Coal-Dependent Steelmaking to History
The steelworks at Scunthorpe operate using traditional blast furnace technology, which requires coal-derived coke to both reach the extreme temperatures (~1,500°C) and act as a reducing agent to strip oxygen from iron ore. The result? Roughly 2.5 tonnes of CO₂ for every tonne of steel produced, emissions on par with aviation and shipping, and around 2.2% of the UK’s entire emissions footprint.
Despite filters and scrubbers, this process also produces nitrogen oxides, sulphur dioxide, and particulate matter, making Scunthorpe one of the UK’s most polluting industrial sites.
It’s no wonder then that British Steel is facing mounting pressure, from the government, from the public, and from within, to change.
By embracing clean energy in steel production, we can future-proof an industry that is the foundation of economic growth. Ultimately, clean energy steel isn’t just good for the planet, it's a smart industrial policy.
Here’s How We Get There: The Path to Renewable Steel
The technologies to decarbonise steel production already exist.
1. Electric Arc Furnaces (EAF): Recycled Steel at Scale
Electric Arc Furnaces offer British Steel a lifeline.
Unlike coal-fired blast furnaces, EAFs run on electricity and require significantly less fuel, labour, and maintenance. This translates to lower operational costs, fewer breakdowns, and greater production flexibility. For a company burning through losses of up to £700,000 a day, the shift to EAFs isn’t a green gesture, it’s a financial opportunity.
EAFs are also faster to scale and can be paused or restarted with far less disruption than traditional furnaces. This agility makes them well-suited for a modern steel market that demands responsiveness, not rigidity.
And while the UK currently exports around 10 million tonnes of scrap steel annually, EAFs would allow that valuable resource to be recycled domestically, adding value here at home rather than abroad.
The technology is already proven and operating in UK cities like Sheffield and Cardiff. What’s needed now is the commitment to scale it nationally and secure the future of British steelmaking for decades to come.
2. Hydrogen-Based Direct Reduced Iron (H-DRI): Clean, Primary Steel
For high-grade steel where scrap isn’t enough, hydrogen offers a clean path forward. Instead of coal, hydrogen gas is used to reduce iron ore, emitting only water vapour. Paired with EAFs, H-DRI has the potential to decarbonise virgin steel production by up to 85%.
The challenge? It’s early-stage tech. Hydrogen production, storage, and transport infrastructure is still emerging, and investment will require long-term vision, government backing, and international collaboration.
Electric Arc Furnaces Will Save British Steel Money and Safeguard Jobs
One of the most pressing questions around the transition to green steel is cost: would replacing Scunthorpe’s ageing coal-fired blast furnaces with Electric Arc Furnaces (EAFs) actually save money?
The answer is increasingly leaning toward yes, particularly over the long term.
EAFs use scrap steel rather than iron ore and coke, and the UK generates approximately 10 million tonnes of scrap steel annually, much of which is exported. Tapping into this domestic supply could reduce raw material costs and eliminate the need for importing expensive metallurgical coal and iron ore. With scrap-based EAFs, steelmakers can also avoid the volatility of global coal markets and reduce logistical expenses.
Carbon pricing is another key driver of cost reduction. Blast furnaces are highly carbon-intensive, emitting around 2.5 tonnes of CO₂ per tonne of steel, compared to as little as 0.5 tonnes per tonne for EAFs. Under the UK’s Emissions Trading Scheme, these emissions come with a significant price tag. As carbon prices continue to rise, British Steel faces mounting financial pressure to decarbonise. EAFs, particularly when powered by renewable electricity, present a viable path to dramatically cut carbon liabilities, potentially saving millions of pounds per year.
Once operational, EAFs also offer greater flexibility and efficiency. They can be ramped up or down in response to market demand and energy prices, which can make them more cost-effective in volatile conditions.
However, the transition doesn’t come without challenges. Installing new EAFs would require an upfront capital investment potentially exceeding £1 billion, including upgrades to power infrastructure, scrap handling facilities, and workforce retraining. UK electricity prices, among the highest in Europe, also pose a risk: EAFs require large volumes of electricity, and without access to affordable renewable power, operational costs could remain high.
Finally, while EAFs are ideal for producing construction-grade steel, making high-grade virgin steel still presents quality control challenges due to impurities in scrap. Meeting these standards may require investment in advanced sorting technologies or supplementing scrap with imported iron or Direct Reduced Iron (DRI).
Despite these hurdles, the direction of travel is clear. Electric Arc Furnaces are more than an environmental upgrade, they represent a more economically sustainable model for steelmaking in a low-carbon economy.
And Let’s Not Forget What’s at Stake
As of 2024, the UK had already breached six of the nine planetary boundaries for environmental health.
The breached boundaries include climate change, biosphere integrity, land system change, freshwater change, biogeochemical flows (nitrogen and phosphorus cycles) and the introduction of novel entities (e.g., plastics and other pollutants).
We must act now. Not only to meet net zero targets but to protect the health and livelihoods of the communities most impacted by legacy industries.
Be Part Of The Movement
We’re here to ask bold questions, and find better solutions.
- What would it take to transition British Steel to renewable?
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Can we protect jobs while investing in clean technology?
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What role should government, industry and investors play?
We believe this is not just a challenge for the steel industry. It’s an opportunity for regeneration, resilience, and reinvention.