Act now to save thousands of jobs by making Yorkshire and the North a world leader in green steel, IPPR North urges government

Its report, backed by many of the region's politicians and business figures, says decarbonising northern steel would cost an average of £267m a year by 2050 but would "help lay the foundations for a stronger, low-carbon and productive industry".

And it says the rewards and acting quickly could be "significant", with economies around the world likely to start imposing extra charges on materials produced with more polluting methods.

High-quality technical and vocational education will be crucial to create the skills pipeline that industry in the North will need, meaning the low-carbon steel industry of the future "must start training the workforce of tomorrow, today".

It comes amid uncertainty for the industry's short-term future, with the potential collapse of lender Greensill Capital threatening thousands of jobs at Liberty Steel's sites in Rotherham, Stocksbridge and Scunthorpe.

Report author and senior research fellow at IPPR North, Jonathan Webb, said: “Northern prosperity is national prosperity. And it can be achieved in part through good, strategic policy and investment in green steel in the North.

"The prize to be won is significant. A cleaner, greener industry that supports good jobs, prosperous places, and a more economically and environmentally just future.

“But we must act fast to seize the opportunity to recast steel as an industry of the future. The time to act is now if we are to become competitive, future world leaders in green steel.

"So government, leaders, businesses, trade unions and others must collaborate without delay, commit to, and invest in a Green Steel Stimulus for the North.

“The steel industry underpins the economies and identities of so many towns and city regions across the North, and we need it now more than ever. If we are serious about levelling up, then we need to be serious about the building blocks of our future low-carbon infrastructure.

"This requires a ramping up research and development and other investment in green technologies, realising a return on that investment that will more than deliver for all."

More than a third of UK steel jobs are in the North in places like South Yorkshire Teesside, and the Humber, meaning some 12,000 jobs around the region and more than 20,000 in the supply chain could be safeguarded if action is taken.

The green stimulus proposed would require significant annual investment to develop new technologies and encourage uptake, says IPPR North. The costs would need to be met by the industry and government, both playing their part, with annual investment increasing but treasury investment decreasing as time goes on.

Sheffield City Region mayor Dan Jarvis said: “Rather than an approach from government that is seemingly willing to let steel sink or swim, we need a fundamentally new approach.

“One that that creates jobs; makes zero-carbon steel production the default, to help tackle the climate emergency; supports domestic defence manufacturing; and, crucially, levels up the North of England. This Green Steel Stimulus provides the blueprints to do exactly that.

“It has never been more important that we safeguard the future viability of our steel industry. Like everyone, I am concerned about the ongoing uncertainty with regard to Liberty Steel and their plants at Stocksbridge and Rotherham, and I’ve consistently called on the Government to do whatever it takes to save jobs and safeguard our steel industry.”

A spokesman for the Department for Business, Energy and Industrial Strategy said: “As an essential provider of over 30,000 well-paid jobs, the steel industry will play a critical role in providing the infrastructure necessary to drive a green economic recovery as we build back better.

“We are working closely with the steel sector to support its transition to a low carbon future. We have announced a £250 million Clean Steel Fund to support the industry to reduce carbon emissions, and our new Industrial Decarbonisation Strategy sets out how it can decarbonise in a way that supports competitiveness, jobs and clean growth.”

How is steel made and how could it be greener?

It's an industry that's provided a purpose for communities across the North for centuries, but the production of steel comes at a cost for the environment.

The methods used are described as 'carbon hungry', with large quantities of carbon dioxide pumped into the atmosphere due to the chemistry at the heart of the process. And as IPPR North's report outlines, it will take a mixture of new methods and approaches to reduce harmful emissions.

The main steel production methods currently deployed in the UK are the blast furnace-basic oxygen furnace (BF-BOF) method of production and electric arc furnace production (EAF).

BF-BOF production used at the UK’s two major steel plants – Port Talbot and Scunthorpe - utilises oxygen to charge blast-furnace iron and scrap into steel.

Coke, which comes from coal, is used as a reducing agent in the blast furnace and carbon dioxide is produced as a waste product. The liquid hot metal which comes out of the blast furnace is saturated in carbon and the excess carbon is then removed in a basic oxygen furnace to produce crude steel.

The more modern EAF technology is already low-carbon, using high-current electric arcs to melt steel scrap and convert it into liquid steel. Because EAFs produce steel from high-quality steel scrap, they can achieve high levels of resource efficiency and re-use when compared to BF-BOF production, but a steelworks retrofit is usually needed.

In the North, EAFs are currently in use at Liberty Steel in Rotherham, Sheffield Forgemaster and Outokumpu in Sheffield. Internationally other countries have also pursued EAF production, with approximately 60 per cent of US steel now produced through EAF methods.

But this method is not without its drawbacks, and there are concerns about the cost of energy for industry compared to international competitors as well as on employment, with fears that using more EAFs will require fewer workers, reduce output, and ultimately result in less direct employment.

The two main technological alternatives for reducing the carbon footprint of steel are hydrogen and carbon capture and storage. With the former, the hope is that hydrogen could be used to reduce iron, with water vapour being produced in place of CO2.

But with hydrogen still in its early stages as a viable technology, its adoption will depend on the development of wider infrastructure to reduce costs. And the report says the North needs to accelerate the roll out of necessary infrastructure such as distribution networks, while the use of hydrogen scales up alongside other decarbonisation technologies.

It adds: "Ambitious plans to create ‘hydrogen economies’ in areas such as Merseyside, Tees Valley, Leeds, and the Humber could rapidly bring hydrogen technologies onstream in the next few years, increasing its role in decarbonising steel production."

Carbon capture and storage (CCS), the process of capturing the carbon dioxide emissions from industrial processes and storing them deep underground in geological formations, has been on the agenda in Yorkshire and the Humber for years.

But with sites needed to store the CO2 which would need to be close to existing steel works, it's suggested that industry located near the North Sea such as the Humber and North East would be most likely to benefit.

And the report adds: "Local government and business leaders in the North had previously developed CCS plans for industry and the energy sector.

“However, the government scrapped its CCS competition scheme in 2015. As a result, significant efforts will need to be made to rebuild trust in future commitments to the use of CCS."