How a government bailout saved British Steel from a £500m environment fine

British Steel found itself in some serious financial trouble last week, without ready means to pay a massive emissions trading liability. Gareth Simkins looks into why the government had to step in.

British Steel, a new brand with an old name, could have faced closure this week. The UK’s second-biggest steelmaker had to secure a £120m government loan to buy EU carbon credits by the end of April, or face the prospect of paying a penalty around four times that figure on top.

Had it not intervened, the government said that the combined bill for defaulting on the extended 30 April deadline for surrendering allowances would have been over £600m. That is half its annual turnover and far more than any firm has ever paid out for infringing environmental law in the UK.

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