‘We need more companies like this’

Swedish startup Stegra is poised to clean up the fossil fuel-guzzling steelmaking industry with low-carbon “green steel,” the MIT Technology Review reported.

Traditional steelmaking relies on fossil fuel-heavy processes, using two tons of carbon dioxide for every ton of steel produced. The sector as a whole makes up 8% of the world’s climate emissions, per MIT Technology Review.

Stegra’s approach could be the solution to cleaner production. The technology enables green hydrogen to react with the oxygen in iron ore, creating water as the only byproduct instead of carbon. If it can be scaled up, steel’s carbon footprint could be drastically reduced while meeting the world’s ongoing demand for construction, vehicles, and infrastructure.

“We need more companies like this,” Jessica Allen, a green steel expert from Australia’s University of Newcastle, told MIT Technology Review.

Founded in 2020, Stegra is building the world’s first industrial-scale green steel plant in Boden, Sweden, set to open in 2026. It will initially produce 2.5 million metric tons of steel annually and scale up to 4.5 million metric tons.

Located in a region rich in hydropower and wind energy, the plant will rely on clean electricity to run its massive 700-megawatt electrolyzer, the largest in Europe. That will generate the green hydrogen needed for steel production.

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Mass commercialization, however, won’t be easy. After all, the company has “multiple steps” that haven’t been proven at scale just yet, chief technology officer Maria Persson Gulda told MIT Technology Review. Those steps include operating the large electrolyzer and integrating the entire process on an industrial level.

Despite the technical hurdles, Stegra’s team remains optimistic. Access to low-cost renewable electricity and more than $500 million in grants from the European Union will mitigate production costs, as well as a 20% to 30% premium on its steel. The EU’s upcoming Carbon Border Adjustment Mechanism also works in Stegra’s favor, as it will impose carbon fees on imported steel starting in 2026.

Despite the price hike, major automakers have already signed contracts for 1.2 million metric tons of Stegra’s green steel over the next several years, including Mercedes-Benz, Porsche, BMW, and Volvo. For consumers, premium steel will add only about 1% to the cost of an average vehicle, making it an attractive option for companies looking to meet sustainability goals.

The technology marks a win for people and the planet. Greener steel production reduces climate emissions, and mass adoption among manufacturers can significantly decarbonize the global industry, combating climate change. Cleaner byproducts also mean less pollutants released in the atmosphere, improving air quality and health for surrounding communities.

Stegra’s innovative technology joins a growing crop of efforts aimed to decarbonize steel manufacturing. Swedish researchers developed a smelting process that promises to remove the air pollution from steel production, and the German government has pledged $2.8 billion to steer the steel sector towards greener production.

For now, Stegra’s plant represents a crucial first step in demonstrating that low-carbon steel production is not only possible but economically viable.

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