A Swedish start-up wants 1.5 billion euros to build a “green steel” factory

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.