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H2 Green Steel Secures €1.5 Billion for Groundbreaking Low-Carbon Steel Plant

ESGH2 Green Steel Secures €1.5 Billion for Groundbreaking Low-Carbon Steel Plant

H2 Green Steel, a startup focused on producing decarbonized steel, has secured €1.5 billion in equity funding to finance the construction of the world’s first large-scale green steel plant. This innovative facility is expected to produce steel with emissions that are 95% lower than traditional blast furnace technology.

This funding round represents the largest private placement in Europe for the year and comes at a time when there is growing demand for low-carbon steel as manufacturers worldwide strive to reduce emissions in their supply chains.

The steel industry is a major contributor to global CO2 emissions, making it one of the most challenging sectors to decarbonize. It accounts for approximately 7% to 9% of direct emissions resulting from the global use of fossil fuels.

H2 Green Steel, founded in 2020, is developing its flagship green steel plant in Boden, Sweden. The project includes a large-scale green hydrogen plant integrated into the steel production process. The company uses green hydrogen, produced using renewable energy, to remove oxygen from iron oxide, significantly reducing CO2 emissions compared to conventional methods. All the energy used in the manufacturing process comes from 100% renewable sources. H2 Green Steel plans to commence production in 2025 and aims to produce 5 million tons of nearly fossil-free steel by 2030.

The company has secured supply agreements with major companies, including Mercedes-Benz, BMW, Scania, and global auto supplier ZF.

The private placement was led by new investor Hy24, with participation from existing investors Altor, GIC, and Just Climate, as well as new investors Andra AP - fonden and Temasek, and existing investors including AMF, Cristina Stenbeck, Hitachi Energy, IMAS Foundation, Kinnevik, Schaeffler, Vargas, and Wallenberg Investments holding company FAM.

Hy24, which recently raised €2 billion for its hydrogen impact fund, Clean H2 Infra Fund, is the world’s largest infrastructure fund dedicated to investing in the clean hydrogen value chain. Its investment in H2 Green Steel represents the largest investment made by its hydrogen infrastructure fund to date.

Morgan Stanley served as the sole financial advisor to H2 Green Steel in this private placement.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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