Pioneering Green Steel Project in Sweden Attracts Significant Investment from European Banks

Pioneering Green Steel Project in Sweden Attracts Significant Investment from European Banks

(IN BRIEF) H2 Green Steel, a Swedish company, has secured significant financial support from the European Investment Bank (EIB) and the Nordic Investment Bank (NIB) for its pioneering green steel project in Northern Sweden. This project aims to revolutionize the steel industry by replacing coal with hydrogen generated from renewable sources, resulting in up to 95% fewer carbon emissions compared to traditional steel production methods. The EIB will provide €314 million, backed by the European Commission under the InvestEU program, and €114 million through intermediated financing. The NIB will contribute €57 million, with €9 million supported under InvestEU. This project aligns with the EU’s climate goals, supporting the decarbonization of the primary steel industry and fostering innovative green technologies.

(PRESS RELEASE) HELSINKI, 22-Jan-2024 — /EuropaWire/ — The Nordic Investment Bank (NIB), an international financial institution with focus on the Nordic and Baltic countries, in collaboration with the European Investment Bank (EIB), is proud to announce its participation in a significant project finance deal for the construction of H2 Green Steel’s large-scale steel plant in Boden, Sweden. This groundbreaking initiative, backed by the European Union’s InvestEU programme, represents a major step forward in decarbonizing the primary steel industry, a sector known for its high carbon emissions.

The EIB will provide €314 million, with €200 million backed by a European Commission guarantee through InvestEU and €114 million in intermediated financing via commercial banks involved in the project. NIB’s contribution to the project finance package totals €57 million, with €9 million supported under InvestEU.

The H2 Green Steel plant is set to revolutionize steel production by significantly reducing carbon emissions, aiming to achieve a carbon footprint close to zero. This ambitious goal is made possible through the replacement of coal with hydrogen generated from renewable energy sources using electrolysis.

André Küüsvek, President and CEO of Nordic Investment Bank, emphasized the importance of large-scale green hydrogen production for decarbonizing challenging industries. He commented “Large-scale green hydrogen production, essential for decarbonising hard to abate industries, is propelled by H2 Green Steel in northern Sweden, where their leading expertise and cutting-edge technology make a significant impact on decarbonising steel. By replacing coal with hydrogen generated from renewable energy sources, the plant will significantly reduce the carbon footprint of steel, aligning with the ambitious goals for a greener future. NIB’s investment, supported by the InvestEU programme, reflects our commitment to fostering innovations that are crucial for the green transition.”

Vice-President of the European Investment Bank, Thomas Östros, highlighted the strategic significance of the steel industry, calling it the heart of the EU economy. He stated “The steel industry is a strategic sector, being at the heart of the EU economy. Our commitment to reach net zero by 2050 requires this sector to undergo transformative changes. It is important that the EIB, as the EU climate bank, is supporting H2 Green Steel in its pioneering development for a breakthrough clean technology to produce low carbon primary flat steel products. The project paves the way for the development of environmentally friendly steel – crucial for the decarbonisation efforts of the so-called “hard to abate sectors”, of which steel is an important one.”

This project aligns with the European Commission’s Green Deal Industrial Plan, aiming to bolster Europe’s manufacturing capacity for net-zero technologies essential to meet ambitious climate targets. It also supports the InvestEU programme’s research, innovation, and digitization efforts, contributing to Europe’s transition to climate neutrality.

The financing agreements exemplify the commitment of NIB and EIB to promoting innovative technologies crucial for the green transition while addressing the challenges of hard-to-abate industries. The global steel sector currently accounts for about 8% of global final energy demand and 7% of global CO2 emissions. H2 Green Steel’s green steel production method promises to reduce CO2 emissions by up to 95% compared to traditional steel manufacturing processes.

European Commissioner for Economy Paolo Gentiloni said: “This agreement is a great demonstration of InvestEU’s support for Europe’s transition to climate neutrality. I am proud that, together with the European Investment Bank and the Nordic Investment Bank as key implementing partners, InvestEU is backing this pioneering initiative, contributing to the production of more sustainable steel in Sweden. This is good news for both the climate and our economy as it will help to significantly cut CO2-emissions, while boosting innovative technologies and creating jobs in Europe, supporting our net-zero industrial base.”

Henrik Henriksson, CEO of H2 Green Steel, expressed gratitude for the thorough scrutiny of the project by lenders like the European Investment Bank. He stated “No one has scrutinized our project more thoroughly than those who back our financing. This massive commitment from lenders like the European Investment bank 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 decarbonization initiatives in hard-to-abate industries.”

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The EIB invests to support projects that align with the EU’s priorities and has committed to channelling at least half of its annual financing volume towards climate relevant projects.

The Nordic Investment Bank (NIB) is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increasing their risk-bearing capacity and thus mobilising at least €372 billion in additional investment.

H2 Green Steel (H2GS AB) was founded in 2020 with the ambition to accelerate the decarbonization of the steel industry, using green hydrogen. Steel, which is one of the world’s largest carbon dioxide emitters, is the company’s first business vertical. The founder and largest shareholder of H2 Green Steel is Vargas, which is also co-founder and one of the larger shareholders in Swedish battery maker Northvolt. H2 Green Steel is headquartered in Stockholm, Sweden, with its first green steel plant under development in Boden, northern Sweden.

Press contacts

EIB: Tim Smit | +352 691 286423 | t.smit@eib.org

NIB: Iiris Anttalainen | +358 10 618 0257 | iiris.anttalainen@nib.int

European Commission: Flora Matthaes | +32 229 83951 | flora.matthaes@ec.europa.eu

H2 Green Steel: Karin Hallstan | +46 76 842 81 04 | press@h2greensteel.com

SOURCE: Nordic Investment Bank