H2 Green Steel has secured more than $4.5 billion in debt financing to build the world’s first large-scale green steel plant in Northern Sweden.
The latest financing amount is above the previously announced equity raised by roughly $325 million. The company has also secured a $271 million grant from the European Union Innovation Fund. In total, H2 Green Steel has secured funding of close to $7 billion for the project.
H2 Green Steel, which is based in Sweden, was founded in 2020 with the aim of decarbonizing hard-to-abate industries, starting with steel. Its production has up to 95% lower carbon emissions than steel made with coke-fired blast furnaces. Production of the green steel plant is already underway, with supply contracts for the hydrogen-, iron- and steel equipment in place.
Steel production has a significant environmental impact and is one of the most emissions-heavy industries. One estimate says the steel and iron industry is responsible for 11% of all carbon emissions. One solution to decarbonize the sector floated by industry stakeholders is to add carbon capture technology. However, this solution does not impact the emissions created during production, and carbon capture and storage technology can be costly.
Financing for H2 Green Steel’s project includes several partners, such as shareholders Microsoft Climate Innovation Fund, Mubea, Siemens Financial Services, IMAS Foundation, and Just Climate. The increase in funding showcases the interest in decarbonizing the steel industry.
The group of more than 20 lenders includes Svensk Exportkredit (SEK) and the European Investment Bank together with commercial banks, led by BNP Paribas, ING, KfW IPEX-Bank, Societe Generale, and UniCredit, the company said.
“H2 Green Steel is an excellent example of the kind of breakthrough projects that the EU Innovation Fund is supporting,” Kurt Vandeberghe, director general for Climate Action, European Commission, said in a statement. “The EU is proud to support these solutions to decarbonize the European steel industry and keep it competitive in a challenging global environment. We congratulate the H2 Green Steel team on their dedication and hard work, and look forward to supporting similar initiatives all over Europe.”
