Back
Stegra’s grand plan to build the first large green-steel mill in the world has recently hit a rough patch. Faced with increasing project costs and construction delays, the Swedish startup has been seeking to raise over $1 billion in additional financing since last fall to complete the flagship facility near the Arctic Circle.
Last week, though, Stegra shared some brighter news: The company landed a major new customer, marking a step forward for the beleaguered project.
A subsidiary of the German conglomerate Thyssenkrupp has agreed to buy a certain type of steel from Stegra’s plant in northern Sweden, which is set to start operations next year. The plant will use green hydrogen — made with renewable energy — and clean electricity to produce iron and steel. The sprawling facility is expected to initially produce 2.5 million metric tons of steel annually and eventually double its production of the metal.
Stegra, formerly H2 Green Steel, estimates that its process will slash carbon dioxide emissions by up to 95% compared with traditional coal-based methods, which account for up to 9% of global emissions.
Thyssenkrupp Materials Services said it would buy tonnages in the “high-six-digit range” of “non-prime” steel — metal that doesn’t meet the high-quality standards required for certain uses but that is still strong and durable enough for other applications. Steel mills typically produce a higher ratio of non-prime metal when they’re starting up, which decreases over time, according to Stegra. The deal should help the firm generate cash flow when the plant first opens.
“A partner for non-prime steel is important for the ramp up of our steel mill,” Stephan Flapper, head of commercial at Stegra, said in a Jan. 12 statement. “Together we can drive an even stronger pull for steel products made via the green hydrogen route.”
The deal is Stegra’s first for non-prime steel, though the startup has already inked agreements for prime steel with automakers such as Mercedes-Benz, Porsche, and Scania, as well as major companies including Cargill, Ikea, and Microsoft. The offtake contracts represent more than half the steel that will be produced during the plant’s first phase.
Notably, Thyssenkrupp Materials Services won’t count the carbon-emission reductions associated with the green steel toward its own climate targets. Instead, Stegra will separately sell the green credentials, in the form of environmental attribute certificates, to other customers in the prime steel market. Stegra previously struck a deal to sell certificates to Microsoft — which is an investor — to help offset emissions from conventionally made steel that the tech giant is using to build data centers outside Europe.
The startup’s announcement with the Thyssenkrupp subsidiary didn’t include details about the financial value or other parameters of the multiyear agreement. Stegra didn’t respond to Canary Media’s requests for comment.
Analysts said the lack of specifics makes it difficult to know exactly how meaningful this development is for the Swedish steelmaker as it works to address its financial challenges.
“This gives a positive signal … that they’re moving in the right direction,” said Anne-Sophie Corbeau, a Paris-based hydrogen analyst at Columbia University’s Center on Global Energy Policy. “But it’s really complicated to quantify how significant this is.”
The new deal with Thyssenkrupp and the previous one with Microsoft “suggest Stegra has a technically sound product,” Brian Murphy, head of hydrogen and low-carbon gas for S&P Global Energy, said by email. He added that, in general, signing long-term offtake deals for clean-hydrogen projects has become “the key unlock” for developers to secure necessary financing.
Still, “more price information is required to assess the full impact on Stegra’s financial position,” he said.
Stegra is forging ahead with its multibillion-dollar project even as other European steelmakers put their hydrogen-fueled ambitions on ice.
Last year, Thyssenkrupp Steel and the industrial giant ArcelorMittal said they were canceling or postponing projects in Europe, citing the economic headwinds and uncertain market conditions facing green steel and hydrogen production. The setbacks come even as the European Union is increasing regulatory pressure on steelmakers inside the bloc and globally to curb CO2 emissions from industrial facilities. In the United States, meanwhile, plans for two marquee green-steel projects were shelved last year.
Construction on Stegra’s plant in northern Sweden was 60% complete as of late October, and the company continues to share snapshots of ongoing work at its snow-covered site on social media. Stegra’s success, if it comes, could reinvigorate green-steel efforts across the region, particularly if the company can sell its steel at prices that cover the higher costs of making low-carbon metal, Corbeau said.
“In the end, if the economics work and they manage to sell most of the steel at a premium, that will be a good signal for a lot of the other companies that have been hesitant,” she said.
Primary steel, the strongest and most durable form of the metal, is typically also the dirtiest kind. That’s because the most common way to forge it begins with producing iron in coal-fired blast furnaces.
Now, for the first time, a new report identifies who buys the lion’s share of primary steel in the United States — and how much steel they’re buying.
At least 60% of U.S. primary steel is purchased by automobile manufacturers, according to an analysis from the environmental group Mighty Earth that was shared exclusively with Canary Media. The six automakers identified in the report — Ford Motor Co., General Motors Co., Honda Motor Co., Hyundai Motor Group, Stellantis, and Toyota Motor Corp. — produce 73% of all new cars on American roads.
The finding highlights a point of leverage for customers in decarbonizing American steel production at a moment when steelmakers are largely reversing plans for greener mills and doubling down on coal-fired blast furnaces.
“The auto market drives blast furnaces in the U.S.,” said Matthew Groch, senior director of decarbonization at Mighty Earth. “If they really cared and wanted to, they could put pressure on these companies they’re buying steel from. But they aren’t, and they don’t.”
Only one of the six automakers, Honda, responded to emailed questions from Canary Media. But the Japanese firm declined to comment on its steel suppliers.
“Honda is actively working to reduce CO₂ emissions associated with raw material procurement and manufacturing processes,” Honda spokesperson Chris Abbruzzese said in an email. “We do not publicly disclose individual supplier relationships.”
Automakers have traditionally relied on primary steel to form the outer shell of their cars because it’s long been considered higher quality than steel made from recycled scrap metal in electric arc furnaces. Increasingly, though, thanks to improvements in its purity and strength, so-called secondary steel has been able to displace some of that demand. Steel recyclers like Nucor say the auto sector represents a growing share of their customer base, but primary steel made using coal still dominates the sector.
To identify the buyers of primary U.S. steel, Mighty Earth commissioned the consultancy Empower LLC to conduct “an exhaustive review” of supply chains, according to the report. The analysts then reviewed “everything from annual reports and investor presentations to new articles and company websites, looking for clues regarding links between the steel facilities of interest and their ties to the largest U.S. automakers.” The study relied on supply chain and financial data from the platforms Panjiva, Sayari Graph, S&P Capital IQ, and MarkLines, and it used OpenRailwayMap to track materials shipped by train.
Since President Donald Trump returned to office a year ago, the nascent efforts to clean up America’s primary steel production have largely collapsed.
Cleveland-Cliffs, which had been awarded a $500 million grant from the Biden administration to finance construction of new, greener equipment at one of its Ohio steelworks, abandoned the initiative and is now working with Trump’s Energy Department to develop a coal-focused scope for the project.
U.S. Steel, whose sale to Japanese rival Nippon Steel was approved by the Trump administration, finds itself at a crossroads. The company has promised some greener investments in the U.S. but has yet to announce any specifics. Its new owner, however, has a reputation as “a coal company that also makes steel” — and Nippon has also promised to invest in upgrading U.S. Steel’s blast furnaces to last longer.
That leaves Hyundai’s project to build a low-carbon steel factory in Louisiana as the flagship push for clean steel in the U.S.
Despite recent challenges from the Trump administration, Hyundai has signaled its commitment to bringing the facility online by 2029. The plant is designed to first use blue hydrogen, the version of the fuel made with fossil gas and carbon capture equipment, to produce the cleaner direct reduced iron. But by the mid-2030s, the facility is expected to switch to green hydrogen, made with electrolyzers powered by renewables.
The low-carbon iron will then be fed into electric arc furnaces to produce steel — making it the first integrated low-carbon steel plant in the U.S. That Louisiana plant could reduce emissions by at least 75% relative to a traditional integrated steel plant with a blast furnace and basic oxygen furnace.
In a sign of progress, Hyundai this month announced plans to test its DRI equipment at an existing steelworks in South Korea in anticipation of bringing the technology to Louisiana.
Once that Louisiana plant comes online, Groch said, it’s expected to generate enough steel to meet Hyundai’s needs and supply additional potential buyers — opening up an opportunity for other automakers. In its report, Mighty Earth calls on automakers to commit to buying more green steel in the coming years.
General Motors and Ford have committed to buying at least 10% green steel by 2030 as part of a pledge via the First Movers Coalition, led by the World Economic Forum. Other global carmakers not included in Mighty Earth’s report, such as Volvo, Mercedes-Benz, and BMW, have adopted separate targets. Honda, Stellantis, and Toyota, meanwhile, have avoided making such promises.
Holding car companies to those targets has proved challenging. While some companies have vowed to slash emissions by buying more low-carbon steel, a September 2024 report by the International Council on Clean Transportation found that carmakers’ pledges to buy fossil-free steel by 2030 cover less than 2% of their total demand for the metal.
“We’re not asking for everyone to have 100% green steel,” Groch said. “But these are their commitments, and the car companies are the ones driving investment in steel.”
I spent much of 2024 writing about the ambitious plans that U.S. steelmakers had to clean up the coal-reliant industry. But by the start of 2025, it was fast becoming clear that those green-steel dreams were in serious trouble.
Under the Biden administration, two big companies had proposed pioneering projects for cleaner steelmaking that were slated to receive $1 billion in federal support and would serve the growing market for lower-carbon metal. The industry seemed poised to begin a new chapter in the storied history of American iron and steel.
The manufacturer SSAB planned to produce iron — the key ingredient in steel — using green hydrogen in Mississippi. Then early last January, I saw the Swedish company had quietly withdrawn from award negotiations with the U.S. Department of Energy following the demise of its would-be hydrogen supplier, Hy Stor Energy. Soon after, President Donald Trump took office for a second time, moving swiftly to rescind grants and dismantle federal programs meant to advance clean energy and curb industrial emissions.
It wasn’t long before Cleveland-Cliffs, the other award recipient, shelved its own initiative for a hydrogen-ready ironmaking plant in Ohio. Today, the company is working with the Trump administration to develop a new scope for the project, one that preserves the use of fossil fuels. And SSAB recently told me that it’s not planning to revive any hydrogen-based projects in the United States.
Green hydrogen, which is made with renewable energy, has long been considered the Holy Grail for decarbonizing heavy industries because it can be used to replace fossil fuels in existing technologies and manufacturing methods. But now the U.S. green hydrogen boom itself has collapsed, taking the steel industry’s ambitions down with it.
At the dawn of 2026, America’s steel producers have no major green hydrogen initiatives slated to start this decade. Supplies of the low-carbon fuel remain scarce and expensive, and there’s no serious, coordinated attempt by the U.S. government to help resolve these stubborn barriers to cleaner steelmaking.
But while it may seem as if the industry has given up on decarbonizing U.S. steel production, the reality is much more nuanced.
Despite the high-profile retreats, manufacturers are still steadily making progress to clean up the country’s nearly 2-century-old industry. Legacy companies are investing in new steel-recycling mills, and startups are building facilities and raising private funding to scale novel technologies. Tech giants are boosting demand for cleaner construction materials as they work to limit the climate impact of the data center boom.
So what should we expect in the year ahead? There is no one clear path forward in the transition to greener steelmaking but rather many winding roads, with some heading toward progress and others looping back to the past. Here are three broad developments I’ll be keeping an eye on.
America’s modern steel era began in the late 19th century, fueled by scorching blast furnaces that use coke — a purified form of coal — to transform iron ore into molten iron, which is then turned into steel. This is still the main way that virgin, or “primary,” steel is made today, and it’s responsible for the bulk of the industry’s carbon emissions and toxic air pollution.
In recent decades, U.S. manufacturers have largely shifted to making “secondary” steel by recycling scrap metal in electric arc furnaces. But a dozen blast furnaces still operate in a handful of states, and their owners say they’re committed to keeping the facilities running well into the future.
U.S. Steel, which is now a subsidiary of Japan’s Nippon Steel, is set to “reline” its largest blast furnace in Gary, Indiana — a major maintenance project that could extend the aging furnace’s operating life by up to 20 years. In late December, U.S. Steel’s board of directors approved $350 million for the undertaking. The company also announced that it will restart operations at an idled blast furnace in southern Illinois to meet rising demand for domestic steel.
Cleveland-Cliffs, which relined one of its blast furnaces in Cleveland in 2022, plans to make similar upgrades at two other mills. The company will reline a blast furnace in Burns Harbor, Indiana, in 2027 and do the same in Middletown, Ohio — the site of its previous hydrogen project — “in the next four to five years,” according to CEO Lourenco Goncalves.
“Reality is back. La-la land is gone,” he said about the change of plans during an earnings call last May.
The manufacturers argue that propping up existing infrastructure is the better choice economically for maintaining and expanding their steelmaking capacity, versus building a new furnace or adopting other technologies. In the long run, however, those coal-fueled furnaces could become big liabilities as automakers, data center developers, and other key customers look to suppliers that offer less-carbon-intensive metal.
“The real challenge, from a technology perspective, is that there’s not really a path for a blast furnace to make the [low-carbon] products that are increasingly being demanded in the market,” said Kaitlyn Ramirez, a senior associate in RMI’s Climate-Aligned Industries Program. “There’s no solution that’s going to be cost-competitive to do that.” She added that the relining decisions represent a “window of opportunity” for steel producers to pivot away from coal instead.
Even as the two steel giants throw a lifeline to a few old dirty furnaces, they and other companies are still making investments to expand lower-carbon production of the ubiquitous, sturdy metal.
Nippon Steel, for its part, recently announced plans to build a $4 billion plant somewhere in the U.S. with two new electric arc furnaces, which typically combine a little bit of iron with a lot of scrap metal. These facilities can curb carbon emissions by 75%, compared to traditional steel mills, because they require using dramatically less coal, a figure that will grow as the nation’s grid increasingly runs on clean energy, according to industry reports.
Its subsidiary U.S. Steel already operates a sprawling steel-recycling operation in Osceola, Arkansas. I visited the Big River Steel site in late 2023, when U.S. Steel was building a second multibillion-dollar plant to make steel specifically for electric vehicle motors, solar panels, and power generators and transformers. Right next door was a field of flattened dirt where Entergy’s 250-megawatt solar farm was soon to be installed.
U.S. Steel finished the construction last year, and the company plans to buy enough clean electricity from the completed solar project to cover 40% of the second plant’s operations. Major steel recyclers like Nucor and Steel Dynamics have also struck deals with clean energy developers in other states to help reduce the emissions associated with running their power-hungry furnaces.
U.S. Steel is also set to construct a “direct reduced iron” facility at the Big River Steel site as it works to lead the industry in “advanced, sustainable steel production,” spokesperson Amanda Malkowski told the Arkansas news site Talk Business & Politics.
Neither Nippon Steel nor its subsidiary has given many specifics about the new ironmaking project. But most DRI facilities operating today use fossil gas to remove oxygen from iron ore, which yields lumps of iron that are fed into electric arc furnaces. This process emits about half as much CO2 as a coal-fired blast furnace. Using green hydrogen can curb overall emissions even further, by up to 90%, experts say.
Based on what’s happened in recent years, I’d be surprised if Nippon Steel plans to source green hydrogen for the project. But another major steelmaker claims to be committed to using the fuel down the road. Hyundai Motor Group says it plans to build a $6 billion steel plant in Louisiana by 2029 that will include a DRI facility and an electric arc furnace. The Korean automaker reportedly intends to start producing green hydrogen at the facility in 2034, though it hasn’t said much publicly about how it will manage such a feat.
Industrial giants aren’t the only ones working to clean up U.S. steelmaking. A handful of well-funded startups are steadily advancing newer ways of making the high-strength metal without using coal.
Last year, Boston Metal said it gotten one step closer to commercializing its “molten oxide electrolysis” technology after it fired up an industrial-size reactor at its facility in Massachusetts. Electra unveiled the site of its first demonstration plant in Colorado, where the company will produce iron with electrochemical devices powered by renewables. And in Texas, the startup Hertha Metals is turning iron ore directly into steel using a high-temperature, single-step process that currently runs on fossil gas but could switch to green hydrogen whenever supplies become commercially available, Hertha’s CEO Laureen Meroueh told me.
These novel efforts are drawing investment from not just global mining giants and metals manufacturers but also companies that use lots of steel — and see the material as a major source of their own supply chain emissions. Meta, for example, has agreed to buy certificates from Electra that will allow the tech company to count the emissions reductions associated with each ton of Electra’s clean iron toward Meta’s climate targets.
“Many of the long-term-focused large companies are looking at sustainability goals that last 10 to 20 years,” said Greg Matlock, the Americas metals and mining tax leader at accounting firm Ernst & Young. “Regardless of what the current political landscape is, I do think there’s absolutely still an appetite [for industrial decarbonization], and it’s a global appetite.”
The European Union is driving much of that global momentum. On Jan. 1, the 27-member bloc began implementing a carbon border tariff, which charges fees on imports of steel, aluminum, and other industrial products made in dirtier facilities abroad. The idea is to level the playing field for European manufacturers that invest in cleaner and potentially costlier facilities, while also encouraging other countries to regulate their own industrial CO2 emissions.
The carbon tariff won’t directly affect U.S. steelmakers all that much, given that they export only a tiny amount of metal to EU-member countries. But the policy’s ripple effects are already transforming the broader industry and putting pressure on all steel producers to modernize and clean up. Countries such as Brazil and Turkey have introduced domestic carbon-pricing policies in response to the EU’s moves. China has started shipping steel made using hydrogen to Italy, which experts say could set the stage for boosting Chinese green-steel exports.
“We’re moving toward a global standard … for lower-carbon steel, so American companies will be well positioned to compete in [global] markets if they continue to decarbonize,” said Angela Anderson, director of industrial innovation for the World Resources Institute. “It’s not likely that those trends are going to just dry up or reverse anytime soon.”
The U.S. has a chance to be at the cutting edge of cleaner steelmaking. Right now, the question seems to be not if we’ll take it, but when — and how far we’ll fall behind the rest of the world in the low-carbon industrial revolution.
.svg)
