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World’s first large-scale green steel plant is launching in Europe, raises €4.5B finance

H2 Green Steel funding
Picture credits: H2 Green Steel

Reportedly, the global steel industry is responsible for 7-11% of the world’s carbon emissions, as it mainly uses highly polluting coal as its fuel source. Sweden’s H2 Green Steel, a steel manufacturing startup aims to replace coking coal with green hydrogen to decarbonise steel production. 

The Stockholm-based startup has raised €4.2 billion in debt financing, €300 million in additional equity from investors, including Microsoft Climate Innovation Fund, Mubea, and Siemens Financial Services, and a €250 million grant from the EU Innovation Fund. The new debt funding comes from a group of 20 lenders, including BNP Paribas (backed Fnality and einwert), Societe Generale, ING, KfW IPEX-Bank, the European Investment Bank, and Svensk Exportkredit. 

With this, H2 Green Steel has now raised €2.2 billion in equity and €4.3 billion in debt to date. The total funding raised for the plant amounts to €6.5 billion. 

Green steel plant

The company aims to advance its plans for what’s touted to be the world’s first large-scale green steel plant in Boden, Sweden. As per the company, the production in this plant will debut in 2027. This plant will use green hydrogen and renewable electricity to produce near-zero-emission steel. 

Near net-zero steel production 

H2 Green Steel was founded in 2020 by Swedish financier Harald Mix and business executive Carl-Erik Lagercrantz through their fund Vargas Holding. They were also involved in the launch of major European climate tech giants, including Northvolt. 

The company employs a fully integrated process incorporating end-to-end digitalisation, electricity from fossil-free sources, and green hydrogen as an alternative to coal. Focused on decarbonising industries, it produces steel with up to 95% lower CO2 emissions.

H2 Green Steel describes its steel as “near zero carbon” as the iron ore will be shipped from Brazil and Canada, resulting in embedded emissions of about 40-50kg of CO2 per tonne of steel produced. This will be more than offset by the 1,800-1,900kg of CO2 emissions per tonne of steel avoided by its process. 

Henrik Henriksson, CEO of H2 Green Steel, stated: “This massive commitment from our lenders, investors, and the Innovation Fund is true recognition of the quality of our company. It’s also a big win for the climate as we hope the model will inspire the financing of other decarbonisation initiatives in hard-to-abate industries.”

Otto Gernandt, Chief Financial Officer at H2 Green Steel, added, “We have gone through this process working side-by-side with many different stakeholders. We have worked as one big team, broken new ground, and found innovative solutions in structures and ways of working that are normally rigid. The result is a historical milestone for one of the biggest decarbonisation ventures globally.”

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