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Why are green steel startups getting “RED HOT”?

An overview of the green steel startups and initiatives


In the past two years, we have seen an increased interest in Green Steel. Startups in this space are raising increasingly larger amounts from venture capital investors. That’s not all, Swedish startup H2 Green Steel has secured billions in debt financing from leading public and private banks. US-based Boston Metal raised a Series C round with ArcelorMittal among the investors, one of the world’s largest steelmakers. While in the backdrop, there is a strong demand from corporate consumers who are willing to pay a premium for Green Steel. All these signals clearly indicate that the winds of change are blowing through the industry. Let’s dive deep to find out more.



Green steel: why does it matter?


The steel industry is one of the largest emitters of CO2, contributing 6%–8% of global CO2 emissions. Ironically, as we move closer to achieving the net-zero targets, we are going to need more steel while attempting to clean up our economies. It is a major concern because the steel manufacturing process is particularly hard to decarbonise.

An often-highlighted strategy is to shift from blast furnace (BF) production to electric arc furnace (EAF) production, but the two processes are not direct substitutes. Steel is made in a process that starts with blast furnaces being fed with coking coal and iron ore, to form pure Iron; and that emits large quantities of carbon dioxide. As a first remedy, these emissions can be captured by installing Carbon Capture and Storage (CCS) systems. Alternatively, Electric arc furnaces can be used with scrap steel as an input, so that the iron-ore reduction step can be eliminated. Furthermore, to reduce the Iron ore without emitting CO2, we could go the Hydrogen based Direct reduction (H2DRI) route or the molten oxide electrolysis (MOE) route. Neither of these options are commercially available at scale at this moment and will require tremendous capital, renewable energy capacity, and coordination among the power, mining and steel industries.


The hottest green steel startups

A great example of such coordination would be the joint venture of HYBRIT (Hydrogen Breakthrough Ironmaking Technology). In 2016, Swedish steel manufacturer SSAB joined forces with mining company LKAB and energy provider Vattenfall to form HYBRIT. In 2021, they rolled out the first-ever fossil-free steel and delivered to their first customer, the Volvo Group. Recently, in 2022 it also received a €143M grant from the European Union. 

There are a lot of startups making significant progress in this sector, we have picked ten startups to represent various solutions that we feel are exciting.



Green steel is the manufacturing of steel without any emissions, and eliminating these emissions will need a mammoth global investment. As per the International Energy Agency, up to $1.4 trillion will be required to decarbonise the iron and steel sector by 2050. The role of financiers in greening steel is absolutely critical because the investment required is beyond most steel producers’ internal resources. 

H2 Green Steel – founded in 2020 – was able to receive financing from prominent European financial institutions in a bid to support their hydrogen-based steel plant construction in northern Sweden. This clearly indicates financiers’ interests in the green steel sector.

ArcelorMittal has launched its XCarb innovation fund, with an aim to invest in companies developing breakthrough technologies to accelerate steel industry’s transition to carbon-neutral steelmaking.


Why now?


All of these movements signal a positive shift in the ecosystem’s willingness to invest in the transition. The possible causes for this shift now can be broadly attributed to four factors:

1) Energy Crisis

In the backdrop of the energy crisis, steelmakers are struggling with the instability and rising costs of fossil fuels. Coupled with the scramble for energy independence, governments are pushing the energy-guzzling sector to invest in a green future.

2) Steelmakers bite the bullet

Established steel manufacturing companies like ArcelorMittal are now very interested to invest and work on a solution for eliminating emissions. ArcelorMittal’s investment in Boston Metal, a Massachusetts-based startup that plans to go to market by 2026, establishes the interest of steelmakers in the future of Green Steel. It is an indicator that the technology is stable and that the time is now right.

3) Demand driving the transition

H2 Green Steel has presold 60% of the project’s total 2.5 million tonnes annual production capacity in the first phase. Buyers like BMW and even home appliance manufacturer Miele are willing to pay a premium for green steel. Mercedes went one step further and took an equity stake in H2 Green Steel in 2021. Thyssenkrupp and Salzgitter signed agreements in October 2022 for the supply of green steel to carmaker Ford. Such a spur in demand will drive more financial institutions to support green steel projects.

4) Government’s push 

Steel is a strategic commodity and involves one of the most energy-intensive manufacturing processes. Governments across the globe want to prioritize it’s decarbonization while ensuring minimum reliance on imports. For example, the UK government is expected to announce hundreds of millions of pounds in support to help Britain’s two biggest steelmakers: British Steel and Tata Steel go green. In Germany, Thyssenkrupp announced a €2 billion investment to replace the first of four blast furnaces using hydrogen-based direct reduced iron technology. This is followed by Salzgitter’s shift from blast furnaces. Both the Salzgitter and Thyssenkrupp projects are subject to public funding. 


Looking forward


Companies conscious of where the regulatory environment is moving will be better placed in the next decade compared to those that do not evolve. The environment right now is conducive for meteoric growth in this segment, and we are excited to see how it unravels. There is no denying that if green steel becomes mainstream, it will be one of the largest successes in our fight against climate change.  



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When looking only at the steel sector, the Net0 Platform features 160 organisations active in the space and the investors and corporations working with them.

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