Stockholm-based green impact company H2 Green Steel (or H2GS) has announced that it has raised $105M (approx €86.15M) in its Series A round of funding. H2GS has been developed in close collaboration between the founding investor Vargas and several strategic and long-term investors, who are global leaders in sustainability and digitalisation.
Investors in this round
H2GS’s current round investors include companies and individuals ranging from strategic off-takers, technical partners, and long-term investors focusing on green impact, sustainability and industry 4.0.
Investors: Altor Fund V, Ane & Robert Maersk Uggla, BILSTEIN GROUP, EIT InnoEnergy, Exor, FAM, IMAS Foundation, Kingspan, Marcegaglia, Mercedes-Benz AG, Scania, SMS Group, Stena Metall Finans, Cristina Stenbeck, Daniel Ek, and Vargas.
How is H2 Green Steel planning to bring emissions down to zero?
According to H2GS, steel production accounts for 25 per cent of Europe’s industrial CO2 emissions, which is more than the Nordics’ total CO2 emissions, or more than all flights departing from the EU. And this is where H2GS has been trying to make a difference.
Petter Odhnoff, CEO IMAS Foundation, says, “IMAS Foundation believes decarbonising the steel industry is a necessary move to reduce carbon emissions and protect the climate. The industry is ripe for a radical transformation, and we, therefore, see H2 Green Steel as an interesting investment opportunity.”
Founded in 2020, H2GS is looking to accelerate change in the industry by eliminating virtually all CO2 emissions from the steel making process. It is working towards a more sustainable steel production to meet the growing demand for fossil-free steel.
Henrik Henriksson, CEO, H2 Green Steel, says, “We’ve seen a tremendous interest, both from the industry, future customers and long-term investors, in our mission to bring down CO2 emissions to zero in the steel industry. Investors all over Europe understand that the climate crisis is the biggest challenge of our time and that a transformation of the industry is necessary. Our closing of the Series A is an important milestone that gives us continued momentum for the journey ahead.”
H2GS claims to become a large-scale steel producer based on a fossil-free manufacturing process primarily targeting large European OEMs (Original equipment manufacturer).
H2GS’s steel plant
In a statement, H2GS mentions that the global steel industry is one of the world’s largest emitters of carbon dioxide, representing approx 7 per cent of global CO2 emissions. And hence, the demand for fossil-free steel is growing rapidly with strong interest from global market leaders in sectors such as automotive, commercial vehicles, white goods, furniture, and construction.
Earlier this year, in February 2021, H2GS announced its plan to become a large-scale steel producer and build a greenfield steel plant in northern Sweden. According to the company’s website, H2GS have decided to locate the plant in Boden-Luleå, Norrbotten, as the region offers unique conditions for fossil-free steel production with access to energy from renewable energy sources, high-quality iron ore, a large port in Luleå, and a cluster of expertise in metallurgy and steel production.
The project includes a giga-scale green hydrogen plant as an integrated part of the steel production facility. It will be a fully integrated, digitalised, and automated greenfield steel plant. “By bringing together raw materials, renewable energy, leading expertise, and artificial intelligence, we aim to bring emissions down to zero. That’s why we are planning to build a large-scale production site for green steel in collaboration with customers across multiple segments including automotive, commercial vehicle, white goods, furniture, and industrial equipment,” mentions the company on its website.
The production of the plant will begin in 2024, and by 2030, H2GS will have an annual production capacity of 5 million tons of high-quality steel.
Partnership with Mercedes-Benz AG & Scania
Mercedes-Benz AG claims to be the first car manufacturer to take an equity stake in the Swedish startup H2GS as a way to introduce CO2 free steel into series production.
Markus Schäfer, Member of the Board of Daimler and Mercedes-Benz, says, “With an equity stake in H2 Green Steel, Mercedes-Benz is sending an important signal to accelerate change in the steel industry and increase the availability of carbon-free steel. As a first step, we are investing a single-digit million amount. As a preferred partner of the startup, we will be launching green steel in various vehicle models as early as 2025.”
A Mercedes‑Benz sedan, for example, is made from about 50 per cent steel, which accounts for about 30 per cent of CO2 emissions in production. With the partnership, Mercedes-Benz is actively and consistently tackling one of the biggest challenges in the automotive industry on the road to CO2 neutrality.
Mercedes-Benz is a member of the Responsible Steel Initiative and is involved in the development of a certifiable sustainability standard for the steel industry. The firm is also a part of Ambition 2039, wherein its goal is to achieve a fully connected and CO2 neutral vehicle fleet in 2039 – eleven years earlier than the EU legislation requires.
Another investor in H2 Green Steel is Scania. This Swedish manufacturer and global provider of transport solutions, including trucks and buses for heavy transport applications, has partnered with H2 Green Steel as a part of its decarbonisation mission.
Speaking on the partnership, Scania’s Head of Purchasing, Anders Williamsson, said, “A Scania truck weighs about six tons and five of those are steel, which today, unfortunately, is produced with a substantial carbon footprint. By investing in and partnering with H2 Green Steel we are now further accelerating the journey towards emission free products across the whole value chain. It’s a significant increase in ambition, which will not only contribute to Scania delivering on the goal of the Paris Climate Agreement, but also raising the bar even further.”