The world's first green steel plant secures over 4 billion euros in additional financing

Decarbonizing the economy brings many challenges, and one of the biggest is greening energy-intensive industry, especially heavy industry. Virtually all manufacturers across the continent are looking for ways to make production more environmentally friendly and greener. Producers of steel in the Czech Republic know this all too well. Steelmakers in the Czech Republic know this all too well. In Sweden, they may have found a way to do just that.

The start-up H2 Green Steel was founded with the aim of decarbonizing the European steel industry. Green steel will be produced at a fully integrated, digitalized steel plant in Boden, northern Sweden. Its production will cut CO₂ emissions by up to 95 percent compared with traditional steelmaking. Integrated processes and new production technologies, such as a new type of electric arc furnace, should also help reduce energy consumption.

The steel plant will replace coal with green hydrogen, with large electrolyzers to be built alongside it to supply the plant. Unfortunately, it is currently unclear where the electrolyzers will get their electricity and just how "green" the green hydrogen will really be.

The plant is due to start operating in 2026 and should produce around 5 million tonnes of green steel annually by 2030. For comparison, 3.4 million tonnes of crude steel were produced in the Czech Republic in 2023, so the plant has considerable capacity.

Investors have confidence in green projects

H2 Green Steel recently secured additional financing of 4.2 billion euros, bringing the total funding secured to 6.5 billion euros. The project was financed by institutions including BNP Paribas, Societe Generale, ING, the European Investment Bank and Svensk Exportkredit. Additional funding came from the Microsoft Climate Innovation Fund and Siemens Financial Services, as well as a 250 million euro grant from the European Union's Innovation Fund.

"None of our projects has been subjected to such thorough scrutiny as this one by our financing partners. This massive commitment from our lenders, investors and the Innovation Fund is a true recognition of the quality of our company. It is also a major victory for the climate, as we hope our model will inspire the financing of other initiatives to decarbonize sectors with hard-to-abate emissions," said Henrik Henriksson, CEO of H2 Green Steel.

The company plans to use the expertise it gains from bringing the first steel plant of its kind into operation to help decarbonize other heavy industries.

Similar projects can also be found elsewhere in Europe. In Duisburg, Germany, ThyssenKrupp's existing steel plant is to be decarbonized; by 2037, it should run entirely on green hydrogen and produce 2.3 million tonnes of green steel a year. Similar plans are also underway in France and Belgium, where ArcelorMittal has received 850 million euros in EU subsidies to decarbonize its operations.

Efforts to decarbonize heavy industry using new technologies, and especially green hydrogen, appear to be the path European steelmakers will take. The competitiveness of green steel on the global market will only become clear in the future.