H2 Green Steel was founded in 2020, aiming to build a large-scale fossil-free steel production in northern Sweden. Kingspan is set to be a single-digit minority shareholder alongside mainly Swedish investors.
Its steel production emits 95% less CO2 than traditional methods and so has the potential to reduce embodied carbon in Kingspan’s insulated panel products by more than 45%.
H2 Green Steel (H2GS) plans to have annual production capacity of five million tonnes of steel by 2030.
Kingspan is investing in a Series A equity fundraising round due to close later this month. Earlier announced investors in the same fundraising round include Scania, the IMAS Foundation (related to IKEA) and prime mover Vargas Holdings.
Kingspan said that its investment reflects its intention to enter into a long-term supply agreement with H2GS, to supply a substantial share of Kingspan’s future steel requirements.
H2GS’s production process replaces coke and coal with hydrogen to achieve an almost a totally CO2-free steel product. The process abates about 95% of the CO2 emissions associated with traditional blast furnaces steel makers: one tonne of H2GS steel will emit less than 0.1 tonne of CO2 compared to more than two tonnes of CO2 emitted producing a traditional tonne of steel.
The green hydrogen gas is produced by electrolysis using electricity generated from hydropower and wind power which is plentiful in the Boden-Luleå region in northern Sweden where H2GS is constructing the world’s first large-scale green steel production site.
The total financing for the first phase of the project amounts to approximately €2.5bn, the majority of which will be financed through green project financing, and Kingspan will be an early stage equity investor. Production is expected to start in 2024, and by 2030 the plant should be producing five million tonnes of green steel annually. Henrik Henriksson, currently CEO of Scania (VW-Group), will lead the company from 1st May 2021.
Kingspan chief executive Gene Murtagh said: “The building industry is a major user of steel, and steel production is a major source of carbon emissions, it is therefore clear that Kingspan’s Planet Passionate commitment to reduce emissions in its primary supply chain must include a new model of steel production. We have set ourselves the challenging target of reducing emissions from the primary raw materials we use in manufacturing by 50% by 2030, and H2 Green Steel offers a compelling route to achieving this goal. We recognise that for companies to make a meaningful contribution to address the climate crisis they need to be prepared for radical thinking and actions, and our determination to transform our supply chain reflects this.”
Carl Erik Lagercrantz, chairman of H2 Green Steel, said: “We welcome this partnership with Kingspan, a company which like our other partners has prioritised and shown leadership in supporting sustainable economic development. Steel is a vital input in many industry verticals, but the extent of its contribution to emissions from the building and infrastructure sector is not well understood, and green steel will be an important component as it seeks to decarbonise. This will be a first investment and long-term supply partnership with a company in this space, and reflects the depth of demand we see for the steel we will be producing.”