Would a resurgence of plans for a Severn Barrage change the rhetoric around steel, questions Gavin Harper.
There are some enormous infrastructure projects, which require great foresight and courage, often in short supply. Massive projects sit on the drawing board for years and take decades, sometimes centuries of deliberation until someone gets on and does them. Everyone then looks back with the smug glow of retrospection, and the inevitable odd gripe about cost over-runs, but the infrastructure then becomes mundane, taken for granted and part of our everyday lives.
Ideas for a Cross-Channel tunnel appeared as early as 1802 after several starts and stops, it wasn’t until 1985 when tenders for promoters were invited and in 1994 the tunnel opened. Crossrail, was first mooted in 1948, after various incarnations and false-starts, in 2005 the Crossrail bill passed through Parliament and the now renamed Elizabeth line will soon be open. The idea of a Panama Canal was mooted in 1534. It took until 1904 with several failed attempts in the meantime for construction to begin in earnest. Big projects take time, and often many incarnations of proposers and delivery firms to reach fruition. ‘Cathedral Thinking’ is required.
The long view tells us that many enormous projects that at one point in time seem incredulous eventually come to pass if the idea is sound. And so, the notion of a Severn Barrage to generate electricity has rumbled on since 1925.
Why revisit these arguments now at a time, when the idea of a barrage is increasingly moot and promoting consortia have since disbanded. Two significant factors have changed in the landscape. Hinkley which Government has long championed as a ‘dead cert’ now looks fairly flaky.
Furthermore, South Wales’ economy faces serious challenges with the recent announcements by Tata. Many call for Government intervention, but many economists question the wisdom of creating more supply of steel when there is oversupply and low demand in the market. A key argument at the moment, is whether there is demand for primary steel making at Port Talbot, or whether the plant should focus on higher value add downstream operations and recycling of scrap.
What if there were a project so great in scale, that it could potentially create demand that would breathe new life into primary steel making in Port Talbot?
In 2010, plans for a Severn Tidal Barrage were scrapped by Chris Huhne. In the same breath, a host of sites for new nuclear power stations were announced. At the time, it was concluded that “other low carbon options represent a better deal for taxpayers and consumers”. With great gusto it was announced that “We are on course to make sure that the first new nuclear power station opens on time in 2018.” That now rings rather hollow. The case for Hinkley Point looks increasingly shaky, EDF’s Finance Director has resigned over Hinkley. EDF now say that they will make the decision over whether to proceed with Hinkley in early May. A prominent Director at EDF has now said that he will vote against the project. All the signs are that may need to start to think of “Plan B” to deliver zero carbon electricity. Political and industrial careers at the highest level are firmly linked to the success or otherwise of Hinkley and despite enormous political pressure for the project to succeed, experience at EDF’s Flamanville and Olikuoto sites does not bode well for power from Hinkley any time soon.
It is said that Hinkley Point will contribute 7% to the UK’s electricity demand, the Severn Barrage 5%. They are projects of a similar magnitude in terms of the contribution they could make to the UK’s electricity supplies. In 2013, Tim Yeo in a report from the Energy and Climate Change Committee concluded that ““We are not convinced that the economic case for the proposed barrage was strong enough.”. However, with the potential for significant job losses in South Wales and the need for industrial regeneration, should we consider the wider benefits of a barrage in terms of connectivity and jobs, as well as the contribution to our energy needs. Peter Hain has long advocated for the transformational impact on South Wales industries the construction of a Severn Barrage would have. Rather than reducing the investment decision down to a “strike price” do we need a more nuanced view of the potential benefits to the region.
At a time when there is such uncertainty around Tata, what might be the impact of a Severn Barrage on investment decisions around the future of steelmaking in Port Talbot were different noises to come from Government about the prospect of a Severn Barrage?
Writing in ‘The Engineer’, Antony Pryor wrote that by far the most critical construction activity would be that of the caissons in Port Talbot. Some early proposals for the barrage suggested using steel caissons, a 1987 report “Steel Caissons for Tidal Barrages” for the Steel Construction Institute, suggested that the barrage should be constructed of sheet steel piles which would then be filled with concrete or sand for strength.
A 2007 Black and Veatch report for the Sustainable Development Concession suggested that the options for caisson construction depended largely on the costs of raw materials. In a market where steel is cheap, perhaps this might be revisited. This plan which was rejected – but even a barrage design using concrete caissons will provide an enormous demand for steel.
Analysing a method of construction using reinforced concrete caissons, In a 2012 paper in the Journal “Energy”, the authors estimate that 900 000 tonnes of steel rebar would be required for the construction of the barrage. Celsa, upon opening their new melt-shop increased their capacity for producing steel rebar from recycled metal from 850 000 to 1 200 000 tonnes of steel per annum. So the barrage would create demand on a scale of Celsa’s annual output. In addition to requirements for rebar, 388 800 tonnes of steel being required for turbines, 200 000 tons of fabricated steel would be required for embankments. There is the potential for a barrage to provide enormous stimulus to South Wales’ steel industry.
Whilst we live in a globalised world, where the market determines the price of commodities and the cheapest supplier invariably wins, for an infrastructure project of this size, scope and scale, there would surely be undeniable logistical and supply chain advantages that would benefit Welsh steel makers were a Severn Barrage to go ahead.
There may also be a futher alignment as the Gupta family, who own “Liberty House” considered one of the prime contenders for a Tata rescue, also have interests in power generation and the Swansea Lagoon scheme. There are of course other options, namely ‘Tidal Lagoons”. Prof. Roger Falconer has argued that Wales would benefit from pursuing both lagoons and a barrage scheme to deliver clean electricity.
For the Severn, Prof. Falconer who has long studied the hydro-environmental aspects of the Severn, has said that a barrage provides “by far and away the most effective means of harvesting the energy” of the Severn.
Sanjeev Gupta’s plans for Port Talbot have been scrutinised from five different perspectives in today’s Western Mail. Professor Calvin Jones of Cardiff Business School is a little less optimistic about the prospects for Port Talbot under Sanjeev Gupta’s plan; he fears a “socialisation” of the clean up costs and liabilities associated with the purchase of the site. Furthermore, without primary steelmaking, the rationale for establishing recycled steelmaking at Port Talbot is thin, over “greenfield” sites. He also notes that Celsa in Cardiff, using arc furnaces to recycle steel into rebar, haven’t turned a profit since 2008.
Lib Dem AM Peter Black also expresses concerns about the loss of Primary Steelmaking which is echoed by Neath Port Talbot councillor Tony Taylor expresses concerns that Gupta’s plan to convert Port Talbot to arc furnaces to process secondary steel, would result in the loss of the deep water harbour for the import of ore. A barrage construction project, would require a dock for the manufacture of caissons before they were floated out into the Estuary. Would it also create sufficient demand for steel that primary steelmaking close to the point of use might still be viable?
Rather than the public assuming potentially open-ended liabilities with the loss of primary steelmaking in a market of low demand, perhaps our money would be better spent creating a project of such enormous scale and ambition, that would create a concentrated local demand for steel, such that the logical option would be to service it using local supply chains. The corollary benefits would be an explosion of jobs and new industrial activity in South Wales, the potential to develop marine technologies with massive export potential, a massive contribution to UK clean energy, and radically improved transport infrastructure for the South West.
The Severn Estuary represents a unique opportunity globally, with the second highest tidal range in the world. For sure, other schemes such as the Swansea Tidal Lagoon also have the potential to benefit the Welsh steel industry – but it is the sheer enormity and scale of the Severn Barrage project that has the potential to create energy, jobs and prosperity on a grand scale.
The arguments about State Aid and government intervention are likely to be well-rehearsed in the weeks and months to come. But what good maintaining additional capacity in an already well-saturated steel market, if there are not over-riding strategic reasons to maintain that supply.
Far better to stimulate demand with a bold, ambitious project of globally significant scale that Port Talbot would be well placed to capitalise upon.
Perhaps in time, we will be able to add the ‘Severnside Turbine’ to the ‘Northern Powerhouse’ and ‘Midlands Engine’.