Swedish startup wants €1.5BN to build emissions-free steel plant

Swedish startup H2 Green Steel has announced its plans to raise more than €1.5bn in equity funding to build steel plants that emit virtually no emissions.

The startup, backed by high-profile investors such as Mercedes, Maersk, and Spotify’s chief executive, is constructing a ‘green steel’ manufacturing plant in Boden, north Sweden. 

Construction of the plant will be financed through more than €5bn in debt and equity. The startup said in October that it had received support from European financial institutions for €3.5bn in debt financing, making it one of the most capitalised climate tech projects in Europe. 

H2 Green Steel confirmed today that it is now in the process of securing the remaining €1.5bn equity funding and is working with advisers from Morgan Stanley, Financial Times reports

Traditionally, steel is made by combining iron ore with coke (a type of coal) at extremely high temperatures. The burning coke produces carbon monoxide, which converts the iron ore into ‘pig iron’ — the basis of steel. The only problem is, when the coke burns it produces a lot of CO2. In fact, the steel industry as a whole is responsible for an estimated 8% of global CO2 emissions. 

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H2 Green Steel looks to decarbonise steelmaking by replacing coke with ‘green’ hydrogen (hydrogen produced using renewable energy). Hydrogen reacts with the iron ore to create pig iron — but without the emissions. The only by-product, the startup says, would be water vapour.  

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