There is no good argument for subsidising Tata at Port Talbot
The begging bowls are out again:
Indian conglomerate Tata Group has threatened to shut Port Talbot steel works unless it is given a £1.5bn government lifeline to help reduce carbon emissions.
No, and no again, and Hell No.
This is not just because of our well known hatred of looting the populace by picking losers. There’s a technical point here which makes the very idea ludicrous.
Steel making is considered one of the hardest industries to decarbonise and the plant requires huge investment in order to switch to either electricity or hydrogen to make the metal, using green power. As it stands, Port Talbot uses natural gas and coal to smelt steel which is used in the UK’s car making industry and construction, among other industries. Losing the plant would threaten the viability of those businesses.
The plant makes virgin, or primary, steel - ore to metal. This is important.
Under decarbonisation plants, Port Talbot's two blast furnaces would be closed and replaced with electric arc furnaces which use recycled steel, reported the FT. This would end so-called primary steel capability at the plant where steel is made from iron. It added that Tata is seeking half the £3bn costs of converting the mill from the government.
Thre are certain steels you might not want to make from scrap in an electric arc furnace. Or even some that you cannot.
So, we’ve that technical reason that we want the blast furnaces to continue so that the car steel (say) continues to be made locally. That’s the argument in favour of the subsidy.
But when they get the subsidy they’re going to use it to close the blast furnaces and install electric arc (the hydrogen part is to do to direct reduction of iron ore pellet which, well, maybe but that’s unlikely) instead. Which is the very technology which can’t make those steels which can only be made from virgin metal.
That is, the subsidy wipes out the very technology and reason for the subsidy. We gotta have virgin steel so give us £1.5 billion to not make virgin steel? Couldn’t they manage something at least a tad more convincing than that?
To repeat. The argument in favour of the subsidy is that there are certain steels which cannot be made from electric arc furnaces. The subsidy is to install electric arc furnaces, which cannot make the steels which are the justification for the subsidy.
Tosh.
That even before we get to the fact that the UK has plenty of electric arc furnace capacity, they don’t cost £3 billion either. The subsidy wouldn’t even provide something we’ve not already got.
We know we really shouldn’t say such things these days but if we were in charge the next time these characters came around begging we’d be found discussing whether 3 or 4 seconds constitutes a sporting head start while polishing our shotguns. Come along gentlemen, at least make your justification for other peoples’ money believable. We’re not even in the steel business and we can see through this.