The news of British Steel’s closure at Scunthorpe sent shockwaves throughout the nation. The blast furnaces, a symbol of Britain’s industrial prowess, are set to be shut down, marking the end of 150 years of virgin steel production in the U.K.
Not a Sudden Reaction to External Trade Pressures
British Steel’s owner, Chinese-owned Jingye, cited “highly challenging market conditions, the imposition of tariffs, and higher environmental costs” as reasons for the Scunthorpe closure. However, this narrative is a convenient distraction from the true culprit behind the decline of the British steel industry.
Green Policies: The Silent Assassin
For nearly a decade, successive governments in the U.K. have pursued a national agenda that prioritizes reducing emissions of carbon dioxide over economic survival. This relentless pursuit of a “green” agenda has had a devastating impact on Britain’s manufacturing sector.
- Climate Change Act of 2008 set the stage for the U.K.’s carbon reduction targets, committing the nation to slash carbon dioxide emissions by 80% by 2050.
- Subsequent regulations, taxes, and subsidies have increased energy costs to levels unmatched among Britain’s peers, making steel manufacturing impossible without incurring heavy losses.
- The U.K.’s industrial electricity prices are approximately 40% higher than France’s and about four times more than those of the U.S.
A Web of Regulations and Taxes
The Climate Change Act of 2008 was followed by a series of regulations that aimed to reduce carbon emissions. However, these regulations have had a stifling effect on the British steel industry.
- One proposed solution was a shift to electric arc furnaces, which recycle scrap steel rather than producing it from raw materials with more carbon-intensive blast furnaces.
- However, British Steel’s Chinese owner reportedly sought a $1.3 billion subsidy to fund the $2.6 billion change.
- The U.K.’s Emissions Trading Scheme adds costs to the company’s emissions of carbon dioxide, a penalty largely evaded by Chinese and Indian rivals.
A Death Sentence for British Steel
The combination of high energy costs, punitive taxes, and subsidies has created a perfect storm that has decimated the British steel industry.
| Country | Carbon Emissions Charge per Ton |
|---|---|
| U.K. | $103 per ton |
| China | A fraction of $103 |
| India | No national charge |
The Steel Industries of China and India: A Cautionary Tale
China and India produce over 1 billion metric tons and 700 million metric tons of steel annually, respectively. Their steel industries are fueled by cheap coal and minimal constraints on carbon dioxide emissions.
“The steel industries of China and India are fueled by cheap coal and minimal constraints on carbon dioxide emissions. Neither faces the punitive energy costs or emissions taxes that hobble British Steel.”
A Warning to Manufacturing Giants
The demise of British Steel serves as a stark warning to manufacturing giants in Western Europe and the U.S. Trading cost-effectiveness for climate compliance is a Faustian bargain that should be resisted by corporate executives and lobbyists.
The Media’s Role in Distorting the Narrative
The media has rushed to pin the blame for British Steel’s closure on U.S. President Donald Trump’s 25% tariffs on steel imports.
This narrative ignores the fact that Britain’s steel industry has been slowly bled dry by a government too enamored with green dogma to see the carnage it wrought.
