Recommendation 22

The Department told us that its analysis shows that the UK has an abundant supply of scrap, which suggests the steel sector could transition to decarbonised scrap-based electric arc furnaces.64 The Department said that while it had done some analysis of options for developing the ironmaking capacity needed to feed electric arc furnaces, it did not yet have a business model. The Department said it would be keen to see a Direct Reduced Iron (DRI) plant in the UK if that can be made economically viable, but this depends on having a large supply of methane or hydrogen. It said that, in the absence of having a supply, the UK is reliant on imports of DRI. The Department told us the National Wealth Fund was looking at opportunities to increase the UK’s capacity for using and producing renewable energy such as hydrogen to power DRI-making in the UK.65