Steel, the backbone of modern infrastructure, has long carried a heavy environmental cost. Each year, nearly two billion metric tons of steel are produced globally, with the traditional process emitting around two tons of carbon dioxide per ton of steel. This makes the industry responsible for approximately 8% of global carbon emissions, exceeding the output of aviation. Against this backdrop, the Swedish startup Stegra, formerly H2 Green Steel, has emerged as a pioneer, aiming to transform steel production using green hydrogen. With nearly $7 billion raised and a plant in northern Sweden set to begin operations in 2026, Stegra is leading the charge toward a zero-emission future.
Stegra’s innovative approach relies on green hydrogen produced through renewable energy sources like hydropower and wind. The hydrogen removes oxygen from iron ore, leaving metallic iron, which is further processed into steel in an electric arc furnace. This method eliminates the carbon emissions inherent in conventional steelmaking, replacing them with water vapour. Stegra’s Boden plant, the first of its kind at an industrial scale, will produce 2.5 million metric tons of green steel annually at launch, scaling up to 4.5 million metric tons. Although unproven on this scale, the process holds immense promise for decarbonising one of the world’s most polluting industries.
The startup has already secured contracts for 1.2 million metric tons of its green steel, with automotive giants like Mercedes-Benz, Volvo, and Porsche among its early customers. These companies are willing to pay a premium of up to 30% to align with their sustainability goals and market green products to environmentally conscious consumers. Stegra’s cost competitiveness is bolstered by its access to inexpensive renewable energy and the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes fees on carbon-intensive imports starting in 2026. The company also benefits from substantial EU funding to support its groundbreaking project.
Stegra’s success, however, will depend on more than innovative technology and favorable policies. Scaling up green steel production and proving its economic viability outside Europe remain significant challenges. Yet, as the first to market, Stegra has the potential to reshape the steel industry and set a benchmark for sustainable industrial practices. Its plant, rising from Sweden’s boreal forests, is a bold demonstration that carbon-neutral steelmaking is possible and, crucially, that customers are prepared to invest in a cleaner future.
