UK Energy Policy Hammers Steel Industry As Rising Power Costs Claim More Victims

The dramatic scenes unfolding in Britain’s steel sector paint a stark picture of industrial decline, with rising energy costs at the heart of the crisis. The closures of Port Talbot and Redcar steelworks, coupled with the ongoing battle for Scunthorpe’s survival, illuminate the severe challenges facing the UK’s heavy industry.

British steelmakers now shoulder electricity costs 50% higher than their German and French counterparts, whilst American manufacturers enjoy power prices a quarter of UK levels. This crushing disparity stems directly from Britain’s aggressive dismantling of coal-fired power generation in pursuit of net-zero targets.

Government data reveals industrial electricity prices have surged 124% over five years, devastating energy-intensive sectors. The impact extends beyond steel, afflicting oil refineries like Grangemouth and ceramics manufacturers across Staffordshire.

The UK steel industry’s decline has been precipitous. From employing 300,000 workers and producing 28 million tonnes annually in the 1970s, current output has plummeted to 5.6 million tonnes with just 37,000 employees. Britain now represents a mere 0.3% of global steel production, whilst China dominates with 54%.

Recent developments at Scunthorpe highlight deeper concerns about industrial strategy and foreign ownership. Reports indicate Chinese owner Jingye planned to relocate British rail production to China, threatening vital infrastructure capabilities. The government’s intervention, while protecting strategic assets, raises questions about future international investment.

The path forward remains complex. Potential solutions include targeted electricity subsidies, now possible post-Brexit, and leveraging proximity to North Sea wind farms. However, without significant investment in energy infrastructure and storage, the sector’s competitiveness hangs in the balance.