The world’s first industrial-scale plant for green steel promises a cleaner future
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As of 2023, nearly 2 billion metric tons of it were being produced annually, enough to cover Manhattan in a layer more than 13 feet thick.
Making this metal produces a huge amount of carbon dioxide. Overall, steelmaking accounts for around 8% of the world’s carbon emissions—one of the largest industrial emitters and far more than such sources as aviation. The most common manufacturing process yields about two tons of carbon dioxide for every ton of steel.
A handful of groups and companies are now making serious progress toward low- or zero-emission steel. Among them, the Swedish company Stegra stands out. (Originally named H2 Green Steel, the company renamed itself Stegra—which means “to elevate” in Swedish—in September.) The startup, formed in 2020, has raised close to $7 billion and is building a plant in Boden, a town in northern Sweden. It will be the first industrial-scale plant in the world to make green steel. Stegra says it is on track to begin production in 2026, initially producing 2.5 million metric tons per year and eventually making 4.5 million metric tons.
The company uses so-called green hydrogen, which is produced using renewable energy, to process iron ore into steel. Located in a part of Sweden with abundant hydropower, Stegra’s plant will use hydro and wind power to drive a massive electrolyzer that splits water to make the hydrogen. The hydrogen gas will then be used to pull the oxygen out of iron ore to make metallic iron—a key step in steelmaking.
This process of using hydrogen to make iron—and subsequently steel—has already been used at pilot plants by Midrex, an American company from which Stegra is purchasing the equipment. But Stegra will have to show that it will work in a far larger plant.
The world produces about 60,000 metric tons of steel every 15 minutes.
“We have multiple steps that haven’t really been proven at scale before,” says Maria Persson Gulda, Stegra’s chief technology officer. These steps include building one of the world’s largest electrolyzers.
Beyond the unknowns of scaling up a new technology, Stegra also faces serious business challenges. The steel industry is a low-margin, intensely competitive sector in which companies win customers largely on price.
The startup, formed in 2020, has raised close to $7 billion in financing and expects to begin operations in 2026 at its plant in Boden.
STEGRA
Once operations begin, Stegra calculates, it can come close to producing steel at the same cost as the conventional product, largely thanks to its access to cheap electricity. But it plans to charge 20% to 30% more to cover the €4.5 billion it will take to build the plant. Gulda says the company has already sold contracts for 1.2 million metric tons to be produced in the next five to seven years. And its most recent customers—such as car manufacturers seeking to reduce their carbon...
