H2 Green Steel was only established in 2021 but is already challenging the incumbents in the sector with its green technology platform. Steel production is one of the ‘dirtiest’ industries, producing two tonnes of carbon dioxide for every tonne of steel produced, but it has previously been constrained by its need for fossil fuels.
Putting a ‘price on carbon’ has opened the opportunity for innovation in the sector.
Integration and renewable energy transforms the process
H2 Green Steel has located near the Arctic Circle to benefit from the abundance of renewable energy from hydropower and wind. It uses the power equivalent to two nuclear power stations to create green hydrogen through electrolysis.
To create ‘green steel’, iron ore is exposed to hydrogen in a reactor to create direct-reduced iron (DRI). The DRI is combined with steel scrap in an Electric Arc Furnace to complete the transformation to steel. An integrated ‘casting and rolling’ process is used to produce products while the steel is warm, further decreasing the energy requirements.
The steel mill is the largest to be built since 1972 and has already taken 2.5% of the European market.
Innovation in the business model
Henrik Henriksson, CEO of H2 Green Steel, explains that although the organisation has many firsts, the innovation comes in the business model. He says: “The steel comes with a 25-30% premium, so the sales strategy was not to approach procurement but instead to target potential customers that had signed up to the ‘Science-Based Targets’. The offer was a reduction in their Scope 3 emissions.”
The ‘take volume’ agreement commits the customer to taking 50% of its volume from H2 Green Steel for three years. Having these customers on its books from the outset enabled H2 Green Steel to borrow against its order book.
Putting a price on carbon
The company is using its customers’ willingness to transform the industry to a more sustainable business model to finance the transition to green steel.
Henrick says that perhaps the biggest achievement is that a small company with global ambitions has shown the incumbents that it is technically possible to increase sustainability in the industry and as a result the predicted timeline for achieving its targets is reducing.
Find out more at h2greensteel.com
