Negotiating the social contract for net zero: Port Talbot, steel and the just transition

Published on June 12, 2024
Sangeeth Raja Selvaraju, Nick Robins

This briefing examines the just transition agenda at the Port Talbot steel works, South Wales, and compares the UK experience with steps to achieve green steel in other European countries. It closes with lessons and recommendations for action by the UK and Welsh governments, for Tata Steel and similar companies, and for the financial system.

Key messages

  • Making the shift to a net zero industrial system involves successfully navigating the transition out of fossil fuels into low-carbon production systems, in a way that is economically, environmentally and socially sustainable. Some of the critical challenges involved in delivering this just transition have been highlighted in the case of Tata Steel’s operations at Port Talbot, including how to bring together private and public capital to invest in both technology and people, how to make social dialogue effective to deliver fair outcomes, and how to govern the local implications of industrial restructuring.
  • The developments at Port Talbot have propelled the critical question of how to deliver a just transition to net zero to the heart of the UK’s economic policy, making this case emblematic of a much wider structural challenge. It shows the urgent need for companies, communities and countries to co-design forward-looking just transition strategies. At present, it risks becoming seen as an example of an unjust transition.
  • While the European Union has been rolling out a comprehensive just transition programme in carbon-intensive regions, the UK Government has not developed a comparable strategy, although the devolved administrations in Scotland and Wales have filled some of the gaps.
  • The UK needs to put the just transition at the heart of a modern industrial strategy. One core feature will be to ensure that public funds supporting the greening of the economy are tied to measurable social outcomes such as employment levels, fair work conditions, skills development and community impact.
  • The UK Government needs to anticipate and address the human implications of decarbonisation in advance, through requiring the country’s top industrial emitters to consult, negotiate and publish just transition plans to show how they will manage the social dimension of net zero.
  • A renewed Port Talbot could become a key part of a green industrial cluster around the Celtic Freeport initiative offering new, quality jobs.
  • For steel itself, an industrial strategy would need to combine both electric arc furnace and direct reduced iron technologies and maintain well-paid and high-skilled jobs – with social dialogue at its core.

This version contains minor updates made on 27 June 2024 and replaces a version first published on 12 June 2024.