The first green steel plant on an industrial scale in the world promises a cleaner, more sustainable future
Some of these automakers–including Volvo, which will buy from Stegra and rival SSAB–are marketing cars made with the green steel as “fossil-free.” And since cars and trucks also have many parts that are much more expensive than the steel they use, steel that costs the automakers a bit more adds only a little to the cost of a vehicle–perhaps a couple of hundred dollars or less, according to some estimates. Many companies have also set internal targets to reduce emissions, and buying green steel can get them closer to those goals.
Stegra’s business model is made possible in part by the unique economic conditions within the European Union. The European Parliament approved in December 2022 a tariff for imported carbon-intensive goods such as steel. This is known as the Carbon Border adjustment Mechanism (CBAM). This law will require importers of iron, steel and other commodities, to declare the carbon emissions associated with those materials, starting in 2024. In 2026, the companies will be required to pay fees that are proportional to their carbon footprint. Stegra’s premium of 30% is already a big enough deal for some companies.
STEGRA
Though the law could incentivize decarbonization within the EU and for those importing steel into Europe, green steelmakers will probably also need subsidies to defray the costs of scaling up, says Charlotte Unger, a researcher at the Research Institute for Sustainability in Potsdam, Germany. Stegra will receive EUR265 millions from the European Commission for its new plant. It was also awarded EUR250 million by the European Union Innovation Fund. Stegra, meanwhile, is trying to cut costs and increase revenues. Olof Hernell is the company’s chief digital officer. He says that the company has heavily invested in digital products to increase efficiency. A semi-automated software will, for example, be used to adjust the amount of electricity consumed based on its fluctuating prices. It is now creating its own carbon accounting system, which will be sold as part of a spin-off company. Hernell says that this type of accounting is extremely important to Stegra because “we charge a significant premium and the promise of low carbon footprints lives within that premium.”
