22 Jan 2024

EIB and NIB to provide €371 million with InvestEU backing for H2 Green Steel’s large-scale production of steel with minimal carbon footprint

Joint press release

  • The EIB and NIB financing, backed by the European Union’s InvestEU programme, is part of a project finance deal for the construction and development of H2 Green Steel’s large-scale steel plant in Boden, Sweden.
  • The green steel will be produced with up to 95% fewer CO2 emissions compared to the current manufacturing process.
  • This ground-breaking European flagship project is essential for the decarbonization of the primary steel industry, one of the hard to abate sectors.

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.

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The EIB invests to support projects that align with the EU’s priorities and has committed to channelling at least half of its annual financing volume towards climate relevant projects.

The Nordic Investment Bank (NIB) is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increasing their risk-bearing capacity and thus mobilising at least €372 billion in additional investment.

H2 Green Steel (H2GS AB) was founded in 2020 with the ambition to accelerate the decarbonization of the steel industry, using green hydrogen. Steel, which is one of the world’s largest carbon dioxide emitters, is the company’s first business vertical. The founder and largest shareholder of H2 Green Steel is Vargas, which is also co-founder and one of the larger shareholders in Swedish battery maker Northvolt. H2 Green Steel is headquartered in Stockholm, Sweden, with its first green steel plant under development in Boden, northern Sweden.

Press contacts

EIB: Tim Smit | +352 691 286423 | t.smit@eib.org

NIB: Iiris Anttalainen | +358 10 618 0257 | iiris.anttalainen@nib.int

European Commission: Flora Matthaes | +32 229 83951 | flora.matthaes@ec.europa.eu

H2 Green Steel: Karin Hallstan | +46 76 842 81 04 | press@h2greensteel.com

Related resources

21 Dec 2023

H2 Green Steel Boden AB

EUR 57 million