The European Investment Bank (EIB) and the Nordic Investment Bank (NIB) will take part in the project finance deal to support H2 Green Steel’s large-scale production facility in Northern Sweden. The EIB will contribute €314 million, of which €200 backed by a guarantee from the European Commission under the InvestEU programme, and €114 million of intermediated financing to be provided through commercial banks participating in the project financing. The Nordic Investment Bank will provide €57 million to the project finance package, of which €9 million supported under InvestEU.
This ground-breaking European flagship project is essential for the decarbonisation of the primary steel industry, one of the most polluting sectors. The plant will manufacture green and sustainable high quality flat steel products targeting mainly the automotive, construction, household appliances, industrial equipment, and energy sectors. In this cutting-edge technology process, the coal in the production process is replaced with a hydrogen generation plant based on electrolysis, using electricity from renewable sources.
Vice-President of the European Investment Bank, Thomas Östros, said: “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.”
Nordic Investment Bank President and CEO, André Küüsvek, said: “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.”
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.”
“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,” says Henrik Henriksson, CEO of H2 Green Steel.
Traditional primary steelmaking is very energy intensive and produces massive amounts of carbon emissions. The global steel sector is currently responsible for about 8% of global final energy demand and 7% of global CO2 emissions. The green steel from the plant will have a carbon footprint close to zero, with up to 95% less CO2 emissions compared to steel produced the traditional way.
The financing agreements are supported in part under InvestEU’s research, innovation and digitisation (RIDW) window, supporting the EU policy objective of developing and boosting innovative technologies for the green transition. They are also in line with the European Commission’s Green Deal Industrial Plan, which aims to provide support to scale up the EU’s manufacturing capacity for the net-zero technologies required to meet Europe’s ambitious climate targets. The operation is also part of the EIB’s commitment to devote an additional €45 billion in financing, on top of its regular lending volumes, to support state-of-the-art manufacturing in strategic net-zero technologies.