Demeter, a European sustainable business venture capital firm, recently invested in Swedish green steel startup H2 Green Steel. Around 6.5 billion euros (U.S. $7.1 billion) have been invested in the steelmaker, known for its innovations in decarbonized steel production and use of hydrogen power. This latest investment capitalizes on a previous investment made by Demeter in January.
The funding will help H2 continue the construction of its novel green steel plant in Boden, Sweden. The plant is scheduled to begin operations in 2026; construction began in 2022. The new funding builds upon the 4 billion euro (US $4.4 billion) debt financing and 1.8 billion (U.S. $1.9 billion) equity investment made at the beginning of the year. Hy24, a joint venture between private investment firm Ardian and clean hydrogen investors FiveT Hydrogen, joined Demeter in the investment in H2.
“Demeter is thrilled to support H2 Green Steel in the financing of this first green steel production unit as well as of the partnership formed with Hy24 for this end,” Philippe Detours, managing partner at Demeter, said in a press release. “This investment allows us to reaffirm Demeter’s commitment to the decarbonization of the industry and the ambition to strengthen our footprint in Europe.”
Photo Courtesy H2 Green Steel
The World Steel Association says steel production accounts for 7–9% of global carbon emissions. Most of that comes from fossil fuels to melt down iron ore.
H2 plans to use electric furnaces powered by green hydrogen to mitigate up to 95% lower emissions compared to steel made with traditional blast furnace tech.
The hydrogen electricity removes oxygen from iron oxide, the ore used to make steel, and avoids most carbon emissions.
The Boden factory is expected to change the steelmaking game forever. The European Union granted H2 250 million euros (US $275.6 million) to develop the factory and produce green steel at a commercial scale. Creating steel with renewable power takes out many emissions otherwise recorded in the production and distribution of products. The private and public funds show a commitment to making H2 a prominent material source firm in the future.
“This project represents a significant step towards decarbonizing the steel industry in Europe,” Pierre-Etienne Franc, co-founder and CEO of Hy24, said in a statement. “We are proud to be part of this momentum, confirming our role as a catalyst in the hydrogen ecosystem.”
Photo Courtesy H2 Green Steel
Car makers are lining up to buy H2’s green steel. The company has inked deals with several top brands like Porsche, Volvo, Mercedes-Benz, and BMW. These car companies want to eliminate as many carbon emissions as possible in their supply chains.
Sourcing cleanly-produced steel would help reach these climate-action goals.
For example, Porsche wants to be carbon neutral by 2030. Creating electric vehicles with green steel could check a lot of boxes on its sustainability goals chart.