Plans to Slash Emissions at Britain’s Largest Steel Plant Cause Unease

Two hulking towers nearly 300 feet high rise from the steel-making complex that dominates the shoreline of the faded industrial city of Port Talbot in Wales.

These two blast furnaces are centerpieces of Britain’s largest steel-making facility, a four-square-mile complex of cavernous factories and rusting metal conveyors on Swansea Bay that produce steel eventually used in cars, cans for baked beans and sports stadiums.

But these massive structures may be gone in a few years or even months if the plant’s owners, Tata Steel, and the British government have their way. Their plan could turn this Port Talbot facility into one of Europe’s most sweeping efforts to slash greenhouse-gas emissions in heavy industry.

Tata, which is based in India, wants to replace the blast furnaces and other parts of the plant dating to the 1950s with one of the world’s largest electric arc furnaces. These devices use a completely different technology: high-voltage current to melt scrap metal from things like factory waste, junked cars and demolished buildings into crude steel that could then be processed by other Tata plants scattered around Britain.

The plan would reduce the carbon dioxide released into the atmosphere here by 80 percent, Tata says, a critical goal as Britain aims to reach net-zero carbon emissions by 2050. The government has agreed to contribute 500 million pounds, or about $600 million, to pay for the £1.25 billion proposal.

But it seems clear that the plan will also result in fewer jobs, and many of the 4,000 employees at Port Talbot say they are worried about severe cutbacks at an industrial site that has sustained families for generations. They also say some of the steel made at Port Talbot could be replaced by material produced at Tata plants in India or elsewhere, where environmental laws may be less strict.

The work force is “scared and concerned” said Barrie Evans, an employee and representative of the Community union, which represents many steel production workers.

This experiment will be watched closely. Companies and governments — especially in Europe, where concern about climate change runs strong — are wrestling with how to clean up steel making, which accounts for around 7 percent of global carbon dioxide emissions, according to the International Energy Agency.

Steel makers in Britain and the European Union also face rising carbon taxes on their emissions, and some plants in Europe seem likely to close or be reduced in size.

Dirty as its production may be, steel is important — even strategic. It is essential for producing the wind turbines and electric automobiles needed for the energy transition, and for armaments at a time of rising military spending. Around 340,000 people in Britain and across the European Union have jobs connected to the steel industry.

Those factors have prompted governments to agree to provide steel makers with billions to help pay for ways to cut emissions, but tens of billions more will probably be needed over the next three decades.

Deploying new technologies for greener steel will be an important contribution to tackling climate change, “but it will come at the cost of tremendous investments,” said Akio Ito, a steel expert at the management consultancy Roland Berger.

The planned £1.25 billion investment at Port Talbot is less than half of what some analysts say may be necessary to convert a complex of its size to low-emission technologies. Keir Starmer, the leader of Britain’s opposition Labour Party, visited the plant last week, saying that his party, which is preparing for a general election next year, would be “more ambitious” in preserving the jobs there.

The electric furnace being proposed will probably lead to a different approach to steel making, Tata executives say. Unlike blast furnaces, which must be run continuously, an electric model can be quickly turned on and off to respond to market conditions like electricity prices, implying the need for a smaller work force, analysts say.

Increasing amounts of clean electricity from the many offshore wind farms planned off Britain would make steel produced by the plant even greener in the future, Tata says. The British government says the shift would cut the country’s emissions by around 1.5 percent.

Tata portrays the plan as a big victory. While closing aging British facilities that Tata says are uncompetitive, the company could also hang on to strong customers like Jaguar Land Rover, which Tata also owns, as well as business in the construction and packaging industries.

Electrification would also appeal to customers that increasingly want to purchase greener steel to lower the carbon footprint of their products. “Demand is there right now for low-emission steel,” said James Campbell, an analyst at CRU Group, a consulting firm.

The proposal “sets up Tata Steel UK for a sustainable and profitable future,” Koushik Chatterjee, Tata Steel’s chief financial officer, told analysts on a call last month.

Part of the India-based Tata conglomerate, Tata Steel has been struggling with its British operations since they were acquired in 2007 in a deal for a European steel company called Corus for around $12 billion, a price that now seems very high. Tata’s British business reported an operating loss of £279 million last year.

Employees say the plant has been in a kind of limbo as the company and the British government negotiated the size of a subsidy. A lack of investment has contributed to breakdowns, they say, while doubts about the future make it harder to recruit workers. Candidates ask, “Is this job going to be here in a year’s time?” said Barbara Evans, a supervisor in the mill’s energy department.

The company and the unions are heading into what could be a tense round of negotiations over Tata’s plans. Employees say they fear Tata may soon begin closing some older parts of the plant and bringing in steel from India or elsewhere. If Tata demands heavy job cuts, “we will just go to war with them,” Alun Davies, a senior official of the Community union, warned.

Tata executives have acknowledged that imports figure in their thinking. “In the transition, we will be looking to import so that we can continue to supply our customers,” Mr. Chatterjee said on the call.

The British government said last month that the plan with Tata had the “potential to safeguard over 5,000 jobs” across Britain. That total falls short of the more than 8,000 that Tata employs in steel operations across the country, implying that 3,000 jobs could go.

Still, Jeremy Hunt, Britain’s chancellor of the Exchequer, said in a statement: “This proposal is a landmark moment for maintaining ongoing UK Steel production.”

Electric furnaces — the dominant steel-making technology in the United States — are unquestionably cleaner than blast furnaces, but there are doubts, including about whether enough scrap will be available in Britain to feed the machine.

Scrap typically comes with impurities, and union officials say the resulting steel may fail to meet the specifications of important customers like automakers.

Tata may have reason to proceed carefully, wary of hurting its image in a country where it is a key employer and investor. Over the summer, in another deal including government subsidies, Tata agreed to invest up to £4 billion in a battery plant, ensuring that Jaguar Land Rover will make electric cars in Britain.

In Port Talbot, a city of about 35,000 people, residents have already seen companies leave, including the loss of a Ford engine plant in nearby Bridgend in 2020.

“Without the steel works, this town loses its identity” said Ryan Morgan, who owns a cafe called the Steel Town Coffee Company not far from the plant.