Sweden’s North is now home to a handful of green tech companies, transforming the region into an economic powerhouse. But can the country’s green revolution transform the dirty steel industry?
In the rural far North of Sweden, the sun sets around lunchtime in the winter months. It’s a sparsely populated region, and you can travel for hours between small towns, encountering only vast snow-covered fields and the occasional reindeer. But in recent years, the area’s old industrial towns have become global hubs for green technology.
Two new Swedish companies have invested billions in creating “green steel,” a new type of steel that cuts at least ninety percent of a regular steel factory’s carbon dioxide emissions.
The companies, H2 Green Steel and Hybrit, are both located just south of the Arctic Circle, where a crop of new start-ups are reinventing Swedish industry to move the country closer to a fossil fuel-free economy. Nearby, there are new biofuel factories, green fertilizer companies, and Sweden’s famous first mega-factory for batteries, Northvolt.
Just as California once had a gold rush, Sweden’s North now seems to be experiencing a green rush, attracting tens of thousands of workers and billions of dollars in investments to sleepy small towns. Analysts expect more than $100 billion to be invested in green technology in the region in the coming decades — an astronomical sum for a country with an annual GDP of $635 billion.
H2 Green Steel now expects that within two years, it will be producing the world’s lowest carbon footprint steel. The steel industry is one of the dirtiest industries, and the transition to sustainable solutions has been slow. Conventionally produced steel in blast furnaces emits two tons of CO2 per ton of steel produced. “When we get started,” a spokesperson for H2 Green Steel says, “we will show that it is possible to reduce emissions by up to ninety-five percent compared to business as usual, and we will do it fifteen years earlier than the most ambitious plans indicated.”
Just as California once had a gold rush, Sweden’s North now seems to be experiencing a green rush, attracting tens of thousands of workers and billions of dollars in investments to sleepy small towns.
Today, the building and construction industry is responsible for forty percent of global emissions. Steel alone produces eight percent of all global carbon emissions, three times more than the entire aviation industry. H2 Green Steel, along with a number of other innovative Swedish companies, promises to drastically cut harmful emissions by inventing new, environmentally friendly ways to build houses.
In Sweden, environmental consciousness is high. The country is home to the world’s most famous climate protester, Greta Thunberg, as well as the influential climate scientist Johan Rockström, who was recently featured on Time Magazine’s list of the world’s 100 most important thinkers.
Despite a new government that has sidestepped some ambitious climate goals, an active grassroots movement of environmentalists has created sustained social pressure on emissions-heavy corporations to lead the green transition. In recent years, Swedes popularized a new word, flygskam (“flight shame”), to put pressure on frequent flyers, since airplanes emit so much pollution.
So it makes sense that Sweden has become a hub for new forms of green steel and building technology. The use of environmentally friendly mass timber (a load-bearing manufactured wood product that can replace concrete and steel in construction) for houses has more than doubled in Sweden in the past decade. But mass timber hasn’t replaced steel altogether. Steel remains the biggest environmental culprit in the construction industry, so further innovation in this field could have a ripple effect on emissions across the globe.
H2 Green Steel has made rapid progress with funding and expansion in the past year, while making multi-year deals with major car companies, such as Mercedes-Benz and BMW. The initial investments came from Harald Mix, a venture capitalist known for his focus on sustainability, who was frustrated that legacy players in the steel industry were so slow to the green transition, and decided to solve the problem himself. The tech news site Sifted recently called Mix “Sweden’s eco-Midas” due to his investments in Northvolt and H2. Mix also runs the private equity firm Altor Capital, which invests in green technologies.
H2 Green Steel now expects that within two years, it will be producing the world’s lowest carbon footprint steel.
In hopes of helping to move the construction industry toward net zero emissions over the next few decades, H2 Green Steel and Hybrit are creating fossil-free steel by using hydrogen, with water from the nearby Luleå river. The hydrogen reacts with iron ore, producing only water vapor, instead of greenhouse gases. Electricity for the production mostly comes from renewable hydropower and wind parks in the area.
“The main local asset is the green electricity. In the past, steel plants were built where the coal mines were, but now those coal mines are empty, and we are building a large-scale hydrogen plant. We also have good infrastructure for logistics. In Sweden, no new steelworks have been built for over fifty years and those that have been built use different technology in the steelworks than we do,” a spokesperson for H2 Green Steel says.
One challenge is resistance from the local indigenous Sami population. The vast infrastructure for green steel, powered by renewable wind and hydrogen, needs plenty of land, and the Sami population in North Sweden have long lived on this land. Several thousands of them work as reindeer herders. In recent years, a majority of all new wind farm projects have been stopped because of local protests. Local officials and most of the population in North Sweden are excited about the region becoming a hub for green technology, so they are increasing their efforts to further development in the region without negative impact on the Sami. Many of these towns have been losing jobs and inhabitants for decades, but now, with the influx of new industry, they are suddenly attracting highly skilled professionals and engineers with experience from places like Google and Tesla.
Green Steel CEO Henrik Henriksson recently told Reuters that they have seen a rapidly increasing global demand for their product. “The willingness to pay more for green steel has increased quarter by quarter. The first contracts we signed were maybe at a twenty percent premium; the most recent are more like a thirty percent premium,” Henriksson said.
The green steel companies are now growing so rapidly that the main challenge is to attract enough employees. More than 100,000 employees are expected to be needed in this area in the coming decades, and many of them have to be recruited internationally, which is a challenge for industrial towns that are a ten-hour drive — or a brief but environmentally harmful flight — from Stockholm. However, as the companies continue to expand, H2 and the others leading the green transition in the region hope that relatively high salaries and the idealism of contributing to the green transition can attract the talent needed.
