The crisis for UK steel is exposing another – perhaps even bigger – crisis for the UK
Our news media seems incapable of even the most basic factchecking
YES energy for UK steelmakers is costly
NO it's not due to net-zero
YES it is due to GAS
Here's what UK media isn't telling you🧵
Our news media seems incapable of even the most basic factchecking
YES energy for UK steelmakers is costly
NO it's not due to net-zero
YES it is due to GAS
Here's what UK media isn't telling you🧵
Comments
Includes carbon costs (blue) & renewable subsidies (grey; steel industry is exempt)
https://www.uksteel.org/electricity-prices
GAS only sets wholesale price 24% of time in Germany and 7% in France
https://www.carbonbrief.org/factcheck-why-conservative-leader-kemi-badenoch-is-wrong-about-uks-net-zero-goal/
Doesn't the steel sector have to pay for its own CO2 emissions?
Nope. They get free emissions allowances.
For 2021-25, Port Talbot was given allowances worth ~£1bn; Scunthorpe got allowances worth around £0.8bn (!)
https://www.carbonbrief.org/analysis-uk-emissions-fall-3-6-in-2024-as-coal-use-drops-to-lowest-since-1666/
- Cumbria coal quality too low (high sulphur)
- Fracking/licences too slow + too small to shift gas prices, which are set at European level
https://x.com/jessralston2/status/1910257907469263127
https://bsky.app/profile/jessralston.bsky.social/post/3lmreo7mumk24
Strangely, these have hardly been mentioned, even though British Steel cited "highly challenging market conditions" in its release on shuttering Scunthorpe
https://www.fitchratings.com/research/corporate-finance/global-steel-markets-under-pressure-due-to-weak-demand-declining-prices-20-09-2024
From South Africa to China and Europe, the industry is struggling
https://www.bloomberg.com/news/articles/2024-10-28/china-s-steel-mills-and-oil-refiners-bear-brunt-of-tepid-economy?sref=Oz9Q3OZU
https://www.ft.com/content/1711fcaf-ac73-4fcd-9ebd-95f5f70b53fb
Why does the price of gas dominate UK energy pricing so much more than other countries?
https://bsky.app/profile/drsimevans.carbonbrief.org/post/3lmrurl6uxs2v
I’m guessing that’s coal which is cheap (good) but polluting (bad)
France = nuclear
I approve of moving dramatically towards the second, but I doubt @carolinelucas.bsky.social who is re-posting does.
Until that is changed you can add as many renewables as you like but gas fuelled power stations will dominate the wholesale electricity price.
Because the structure was created in the '90's they didn't really anticipate the intermittency of renewables.
This is why the gas price sets the wholesale electricity price
To do electricity storage properly we need a barrage on The Wash/Severn but that's not going to be very popular.
All generators (including wind) get the price of the most expensive source in that 30 mins.
However, in modern contracts it's the government who pocket the difference between gas and wind price!
Obviously the government keep it quiet that THEY take the difference between the lower wind cost and the gas price.
Marginal pricing is why gas sets the electricity price despite adding more renewables each year.