Several automakers, including Volvo and SSAB, promote their vehicles as “fossil-free” when made with green steel. This type of steel is slightly more expensive than traditional steel, but for manufacturers, the additional cost is relatively minor, often adding only a few hundred dollars to the price of a vehicle. Many companies are pursuing internal emission reduction goals, and using green steel can significantly contribute to achieving these targets.
Stegra’s business model benefits from the European Union’s recent regulatory changes. In December 2022, the European Parliament introduced tariffs on carbon-intensive imports, including steel, through the Carbon Border Adjustment Mechanism (CBAM). Starting in 2024, companies that import steel and other goods will be required to report the carbon emissions associated with those materials. By 2026, fees will be implemented based on the carbon footprint, making green steel a potentially valuable option for many companies.
Charlotte Unger, a researcher at the Institute for Sustainability in Potsdam, Germany, noted that while the new law could promote decarbonization among steel importers, there might be challenges for green steel producers in terms of scaling up production. He emphasized the need for subsidies to help cover additional costs. Stegra has already secured significant funding from the European Commission, receiving 265 million euros for factory construction, along with 250 million euros from the EU’s Innovation Fund.
To enhance efficiency and profitability, Stegra is heavily investing in digital solutions. The company uses semi-automated systems to adjust electricity usage based on fluctuating power prices. Recognizing a gap in the market, Stegra is also developing its own carbon accounting software to track emissions throughout the steelmaking process, which it plans to commercialize through a new spin-off. This initiative is crucial for justifying the premium for its green steel, as it underpins their commitment to reducing carbon emissions.