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A Swedish company, backed by investors like Spotify founder Daniel Ek, is planning to build a steel production facility in the north of the country powered by what is known as the “largest green hydrogen plant in the world”.

H2 Green Steel, which was founded in 2020, will focus on steel made using a “fossil-free manufacturing process” and seek to provide the European manufacturers with its end product.

In an announcement earlier this week, the company, led by Henrik Henriksson, the current CEO of Scania, announced that steel production would start in 2024 and be based in the Norrbotten region of Sweden. By 2030, the company is expected to have the capacity to produce 5 million tons of steel per year.

“The climate crisis is the greatest challenge of our time,” said Henriksson in a statement released on Tuesday.

“And, given the impact of steel on the sustainable development of other industries, rapid change in the steel industry is extremely important,” he added.

According to the International Energy Agency, the iron and steel sector is responsible for 2.6 gigatons of direct carbon dioxide emissions per year, a figure that was higher in 2019 than direct emissions from sectors like cement and chemicals.

The steel sector is “the largest industrial coal consumer, which covers around 75% of its energy needs”.

H2 Green Steel’s hydrogen plant will be around 800 megawatts, with the end product replacing coal and coke in steel production.

Hydrogen can be produced in a number of ways. One involves the use of electrolysis, where an electric current splits water into oxygen and hydrogen. If the electricity used comes from a renewable source such as wind or sun, it is referred to as “green” or “renewable” hydrogen.

The company’s largest shareholder is investment firm Vargas, co-founder of battery manufacturer Northvolt. H2 Green Steel is currently completing Series A equity finance of € 50 million (approximately $ 61.1 million). Investors include Scania, EIT InnoEnergy and Spotify founder Daniel Ek.

In the initial phase of the project, the total funding will be around 2.5 billion euros. The company’s financial advisors are Societe Generale, KfW IPEX-Bank and Morgan Stanley.

Steel production is one of many industrial processes that are ripe for improvement in terms of emissions and other sustainability metrics.

The production of aluminum is different. German automaker BMW recently announced that it has started sourcing and using aluminum, made using solar power, for example.