How the end of coal in the UK and steelworks closure are related

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It's a momentous day in UK industrial history, in two respects. But what have the closures of the last blast furnace at Port Talbot and the final British coal-fired power station at Ratcliffe-on-Soar got to do with one other?

In one respect the common factor is coal. The blast furnace at Port Talbot is one of the last remaining descendants of the key technology invented in Britain during the early Industrial Revolution.

Abraham Darby pioneered the process of using coal (a baked form of coal called coking coal, to be precise) to refined iron ore - turning it into what is known as pig iron.

That, along with the basic oxygen process devised by Henry Bessemer, was among the foundational inventions which happened in Britain, and helped to kick-start the fossil fuel age that followed.

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Blast Furnace No 4 at Port Talbot is not the last remaining such facility in the country - there are also two blast furnaces still operating at British Steel in Scunthorpe - but all of these furnaces will soon be gone, replaced with electric arc furnaces, which produce steel in a far less carbon-intensive way.

All of which sounds like good news - but there's a catch we'll come back to in a moment. In the meantime, let's take a second to ponder another landmark moment: the end of coal power.

Britain was also the first country in the world to have an operational coal-fired power station - the 1882 plant in Holborn. And today it has closed its last remaining coal-fired power station.

In one sense this is only a formalisation of something that has been creeping up on the UK for some time: the gradual switch from coal-fired power to a combination of gas power and renewables.

Gas-fired power stations are better than coal plants in at least three respects: they are more efficient at turning fuel into power, they are quicker to switch on and off and they emit about half the amount of carbon.

But this switch is not without its consequences. Coal, like it or not, is still a cheaper form of power than gas - at least before you take into account carbon costs. And unlike gas, coal supplies are not as dependent on Russia.

Also, Britain's switch from cheap-ish coal towards more expensive gas and renewables (themselves dependent on a rainbow of government subsidies) is part of the explanation for why the country currently has some of the most expensive power costs in the developed world.

Indeed, industrial power prices, which are most directly affected since they absorb most of the subsidies for renewables, are higher than in any other developed country.

And since electric arc furnaces are powered by electricity (as the name suggests), our ability to make steel at a reasonable price will be determined in future by those industrial power costs.

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In other words, green steel in the UK is likely to be considerably more expensive, in part because of how quickly the UK is pushing towards green power.

It's worth saying, that the push towards renewables is not the only reason for high UK power prices. There is also the fact that the grid in this country is short of investment - not to mention the dysfunctionalities of the way wholesale power markets are structured.

But eye-wateringly high power prices are part of the explanation for why industry is shifting away from Britain to cheaper locations. It is part of the explanation for why this country is de-industrialising faster than nearly every other developed nation.

That, in turn, is helping to reduce the amount of carbon emitted in this country. But it's also helping to diminish the number of people employed in manufacturing and the amount of economic output generated by the sector.

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