swedish startup H2 green steel announced its intention to raise more than €1.5 billion in equity to build steel mills that emit virtually zero emissions.
The start-up, backed by top investors such as Mercedes, Maersk and the chief executive of Spotify, is building a ‘green steel’ manufacturing plant in Boden, northern Sweden.
The construction of the plant will be financed by more than 5 billion euros in debt and equity. The startup said in October that it had received support European financial institutions for 3.5 billion euros in debt financing, making it one of the most capitalized climate technology projects in the Europe.
H2 Green Steel confirmed today that they are in the process of securing the rest €1.5 billion equity financing and works with advisors from Morgan Stanley, Financial Times reports.
Traditionally, steel is made by combining iron ore with coke (a type of coal) at extremely high temperatures. Burning coke produces carbon monoxide, which turns iron ore into “pig iron”, the basis of steel. The only problem is that when coke burns it produces a lot of CO2. In fact, the steel industry as a whole is responsible for a estimated 8% of the world CO2 emissions.
H2 Green Steel seeks to decarbonise the steel industry by replacing coke with “green” hydrogen (hydrogen produced from renewable energies). Hydrogen reacts with iron ore to create cast iron, but without the emissions. The only by-product, according to the startup, would be water vapor.
The hydrogen itself would be made in an electrolyser at the Boden site. The electrolyser would be powered byrenewable energy, including hydropower from the Lule River and nearby wind farms. Overall, this process is expected to reduce emissions from the steel industry by 95%.
IIf successful, the Boden plant will be Europe’s first large-scale green steelworks, with its products used to build everything from cars and freighters to buildings and bridges. The startup plans to roll out the first commercial batches of its steel by 2025 and aims to produce five million tonnes of green steel per year by 2030.
However, the world’s annual steel production is currently around 2,000 million tons, according The figures of the World Steel Association. This would make the Boden plant’s production capacity a mere “drop in the ocean”, Ms Lund Waagsaether, senior policy adviser at the Brussels-based climate think tank E3G, told the BBC.
But the Boden plant is not the only one of its kind in the pipeline. H2 Green Steel has already signed an agreement with a Spanish company Iberdrola to build a solar-powered factory in the Iberian Peninsula. Hybridanother Swedish company, hopes to open a fossil-free green steel plant by 2026 in a joint venture with mining operator LKAB, Nordic steel company SSAB and energy company Vattenfall. GravitHy plans to open a hydrogen plant in France in 2027, and German steel giant Thyssenkrupp recently announced plans to introduce carbon-neutral production at all of its plants by 2045.
These projects are expected to boost European domestic production of green steel and may soon gain political support as well. JThe EU is finalizing the Carbon Border Adjustment Mechanism, a strategy designed to make it more expensive for European companies to import cheaper non-green steel from other parts of the world.