Deal Insight: Financing The World's First Large-Scale Green Steel Plant
Thursday 14 March 2024
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Earlier this year, UniCredit supported H2 Green Steel in a EUR 4.2 billion project financing to fund the world’s first large-scale green steel plant in Europe. This flagship green steel plant in Sweden is testament to how we engage with our clients in the sector – supporting their decarbonisation plans via impactful ESG advisory and bespoke green and transition financing.
Earlier this year, we supported H2 Green Steel in a EUR 4.2 billion project financing to fund the world’s first large-scale green steel plant in Europe – a clear display of our willingness to play a proactive role in the decarbonisation of this critical but high-emitting sector. H2 Green Steel was founded in 2020 with the purpose to decarbonise hard-to-abate industries, starting by producing steel with up to 93% lower CO2 emissions than that made with coke-fired blast furnaces.
For context, traditional blast furnaces using coal and coke produce about two tonnes of CO2 per tonne of steel. In comparison, H2 Green Steel’s direct reduced iron production process aims to reduce emissions by up to 1,900kg per tonne of finished steel.
The construction of this flagship green steel plant (in the picture) in Boden, Sweden, with integrated green hydrogen and green iron production, is already well under way with supply and power purchase agreements in place.
Our early involvement in the transaction and mandate as lead bank not only recognised our strong sustainable financing credentials, but also the sector-driven content we are able to equip our clients with, which allows us to drive more strategic conversations.
Our support for H2 Green Steel underlines our commitment to provide tailored solutions for clients in hard-to-abate industries in pursuit of their Net Zero goals. At the same time, it is also a story of successful cross-business collaboration – UniCredit Unlocked in action. We are extremely proud that we have been able to play our part in this landmark transaction.
The financing was also particularly timely as it followed the announcement of our own 2030 target our for the steel sector – which forms part of our commitment to reach our 2050 goal of a Net Zero lending and investment portfolio.
To achieve this, we will continue to engage with our clients in the sector – supporting their decarbonisation plans via impactful ESG advisory and bespoke green and transition financing.
In September 2022, alongside five other lenders, UniCredit became a signatory of the Sustainable STEEL Principles, a climate-aligned finance agreement for the steel sector.
Discover more on our approach in the ESG section and in UniCredit's 2023 Integrated Report which describes how the bank creates sustainable value over time under a common purpose of empowering communities to progress.