The Swedish steel industry produced 4.4 million tonnes of crude steel (3.4 million tonnes of finished steel) in 2020, which represents 3.2% of crude steel production (2.5 % of total finished steel production) in the EU-27 and the UK.

Despite its modest share in the region’s steel production, Sweden has made headlines by being at the forefront of the global race to produce fossil-free steel on a commercial scale. At least two initiatives by HYBRIT and H2 Green Steel, separately, have been launched with a goal of manufacturing 10 Mt of crude steel per year by 2030.

Sohaib Malik, Senior Wood Mackenzie Analyst, commented: “Sweden’s campaign to decarbonize the steel industry signals substantial cost reduction potential for green steel over the next several decades, mainly due to the declining the cost of renewable energies and green hydrogen and the increase in carbon prices.

“The country has the largest iron ore reserves in Europe and excellent renewable energy resources – two main preconditions for the production of green hydrogen and low-carbon crude steel.”

At a discounted electricity cost of USD 30 per megawatt hour (MWh), wind power is now a very economical source of electricity generation in Sweden. Further cost reductions are expected with better financing structures for onshore wind, reduced investments for onshore and offshore installations, technological optimization for asset management and state support for grid infrastructure offshore.

Alkaline electrolysis technology is very likely to play a key role in the production of green hydrogen, which is crucial for Sweden’s green steel production. Compared with proton exchange membrane electrolysis, it has a lower investment cost of USD 925 per kW today and it is expected to be halved by 2030, allowing a discounted cost of USD 1 per kilogram of d green hydrogen using terrestrial wind energy.

Senior Research Director Mingming Zhang said, “We are finding that a combination of hydrogen from alkaline electrolysis and renewable energy from onshore wind will produce the most cost-effective green crude steel in China. Sweden. ”

Assuming a carbon price of US $ 100 / t, green steel producers could benefit from US $ 85 / t of carbon credits. Better financing models for onshore wind and 48% lower investment in alkaline technology in 2025 results in a cost of steel of US $ 360-390 / t in carbon price scenarios ranging from US $ 50 US $ / t to US $ 150 / t.

Zhang added, “Producing green steel at cost parity with conventional steel in the 2020s is quite possible if we use natural gas-based direct reduction iron and the manufacturing process of electric arc furnace steel as a reference. ”

Although the HYBRIT and H2 Green Steel projects are supported by industrial heavyweights, some critical parts of the proposed value chain rely on technological solutions that have not yet been tested on an industrial scale, posing considerable challenges that must be overcome to keep the promises. In particular, the two companies have yet to find solutions for the safe and economical storage of hydrogen and to demonstrate the commercial success of their technology.

Malik said: “Global demand for steel will reach 1.87 billion tonnes / year by 2030, 6.4% more than in 2020. The case for green steel will grow stronger as time goes on. that its cost will decrease. In addition, the success of green hydrogen to produce green steel on a commercial scale will justify the craze around its ability to accelerate decarbonization.