Read the full story from the Rocky Mountain Institute.
The climate finance community should be watching Sweden. Swedish steelmaker H2 Green Steel (H2GS), founded in 2020 to produce green steel (using renewable hydrogen), is completing a landmark €5 billion+ fundraise for its first plant in Boden, near the Arctic Circle in northern Sweden. As magnificent reindeer roam Boden’s forests, an industrial project finance template is taking shape and it’s important: heavy industry produces 30 percent of global carbon emissions and steelmaking is 7 percent alone.
Industrial project financiers can reflect on five key lessons from the ongoing H2GS deal: 1) Diverse seed equity rounds can work, 2) entice offtakers with equity upside, 3) use export credit agencies (ECAs) and government support, 4) build flexibility throughout the deal, and 5) hire banks with relevant climate expertise.
Though H2GS is starting as a steelmaker leveraging green hydrogen, these five financing principles are relevant to various first-of-a-kind, commercial-scale industrial decarbonization projects in development around the world. This approach may be especially relevant to developers who cannot finance large projects “on balance sheet” by issuing corporate debt, and who therefore need non-recourse project financing.
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