Think tank Green Alliance said this week that a condition of the £600m ($740m) bailout for the two ailing companies should be that steelmakers commit to switching half their production from coal powered blast furnaces to electric arc furnaces.

“Using this money to switch half the capacity of each site to clean steel production would cut 4.9m tonnes of CO2 every year. That’s equivalent to taking 1 in 14 cars off of UK roads,” the group said.

The Green Alliance describes itself as an independent think tank working to accelerate political action and create transformative policy for a green and prosperous UK.

British Steel came under fire earlier this month from the FCA for a “deliberate attempt to exclude’ pensioners from compensation scheme”.

Roz Bulleid, research director at Green Alliance, said the proposed bailout package provided an opportunity to help the firms invest in new low carbon technologies. “If the £600m is spent directly on lower carbon steelmaking equipment and comes with commitments from steelmakers to green the rest of their production, it looks like good value for the scale of carbon savings that could be achieved,” she said. “However, ministers must attach strict green strings to any bail out to make sure taxpayers’ money is well spent and genuinely used to futureproof this critical sector.”

The think tank has called on the government to bring in stringent targets for the companies as part of the funding deals, such as requiring the steel industry to shift half the capacity of each site from coal-powered blast furnaces to electric arc furnaces, according to City AM.