H2 Green Steel Secures €4.5bn Additional Funding for World's First Green Hydrogen-based Steel Plant

Swedish start-up H2 Green Steel (H2GS) has recently secured an additional €4.5 billion in funding for its groundbreaking large-scale green steel project, bringing the total financing for the facility in Boden, northern Sweden, to nearly €6.5 billion. This initiative aims to revolutionize the global steel industry, notorious for its substantial carbon emissions linked to coal usage. H2GS plans to mitigate this environmental impact by substituting coking coal with green hydrogen, produced through renewable electricity. The project, set to feature approximately 1 gigawatt (GW) of electrolysers, is poised to become Europe's largest green hydrogen facility.

The core strategy involves using renewable energy to power electric arc furnaces, a move designed to decarbonize the iron extraction process from ore, ultimately achieving near-zero-emission steel production. H2GS has taken substantial steps towards realizing its vision, securing binding agreements with major customers such as Mercedes-Benz, Porsche, Scania, ZF, and Cargill. These agreements involve the sale of half of the initial annual volumes of 2.5 million tonnes of green steel. Additionally, the company has inked contracts for the supply of hydrogen, iron, and steel equipment, including a noteworthy 700MW order for Thyssenkrupp Nucera electrolysers.

In terms of financial backing, H2GS has solidified agreements for €4.2 billion in project financing, incorporating senior debt from a consortium comprising over 20 lenders, including the European Investment Bank, BNP Paribas, and ING. Furthermore, they have successfully raised close to €300 million in equity, with notable new shareholders such as the Microsoft Climate Innovation Fund and Siemens Financial Services. The venture has also received a noteworthy €250 million in grants from the EU's Innovation Fund.

Henrik Henriksson, CEO of H2GS, expressed gratitude for the significant commitment from lenders, investors, and the Innovation Fund, emphasizing that this support underscores the company's credibility. Thomas Östros, Vice-President of the European Investment Bank, highlighted the pivotal role of the steel industry's transformation in aligning with the EU's net-zero goals.

With this momentum, H2GS is moving forward to make a final investment decision on the project, marking a substantial stride in the development of environmentally friendly steel production. Beyond contributing to the steel industry's decarbonization, the project serves as a blueprint for other challenging sectors seeking to achieve sustainability objectives. The transformative impact of H2GS's venture underscores the potential of green hydrogen in propelling the transition to more sustainable and low-carbon industries.