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In 2023, a handful of green steel megadeals gave climate tech funding numbers a boost in an otherwise disappointing year. For instance, in September H2 Green Steel announced it had raised $1.6 billion in equity funding for its planned plant in Sweden.
But the plant will continue to boost deal values in 2024, as the company announced yesterday it raised $5.17 billion in additional financing for the project.
Making steel has a high climate toll; the industry accounts for up to 7% of global greenhouse gas emissions. But steel is also moving more quickly towards decarbonization than other industrial sectors, Attwood told Latitude Media.
“That is mostly because there’s some very clear demand for it,” she added. “Especially in Europe, you’ve seen a lot of automakers going to their steel suppliers and saying ‘I want something that is green.’”
That demand has turned Europe into a leader when it comes to green steel, Attwood said: “Asia and North America are starting to catch up, but this is really a European phenomenon.”
Despite the promising signs, green steel isn’t yet approaching a tipping point of commercialization, Attwood said, in part due to the immensity of the steel industry, and to the relatively small size of current offtake deals.
“If you total up all the green steel projects that we’ve seen across all of the different decarbonization technologies, it’s just under 100 million metric tons by 2030,” she said. “That’s less than 5% of the total steel production that we expect by then.”
In addition to the massive size of its Boden plant, H2 has set itself apart in the sector by relying primarily on private financing, she added, while other green steel makers tend to lean on government financing. Given that landscape, the latest round of debt financing is set to prove a funding model for commercial-scale projects.
Atwood expects that most of the industry is watching the ultimate success of the project closely, in the hopes that they’ll be able to follow a similar financing path in the future: “It’s really a test case not just for the technology, but also for this form of financing for the whole industry.”