According to the market researcher, the Nordic country could take the lead in terms of the more environmentally friendly version of the alloy, despite the fact that its current production is not particularly large. Sweden’s steel industry produced 4.4 million tonnes (Mt) of crude steel (3.4 Mt of finished steel) by 2020, which corresponds to 3.2% of the crude steel production (2.5% of the total finished steel production) in the EU-27 and the United Kingdom.

“Sweden’s investment in carbon dioxide emissions in the steel industry signals a significant cost reduction potential for green steel in the coming decades, mainly due to the declining costs of renewable energy sources and green hydrogen and rising coal prices,” writes Wood Mackenzie’s chief analyst, Sohaib Malik. “The country boasts Europe’s largest iron ore reserves and excellent renewable energy resources – two primary conditions for the production of green hydrogen and charred crude steel.”

According to Malik, at an equalized electricity cost of 30 dollars per megawatt hour, wind power is a very economical source of electricity production in Sweden today. At the same time, further cost reductions are expected with better financing structures for onshore wind power, lower capex for onshore and offshore installations, technical optimization for asset management and state support for offshore grid infrastructure.

The analyst also said that alkaline electrolysis technology will most likely play a key role in the production of green hydrogen, which – he emphasized – is crucial for Sweden’s green steel production.

The WoodMac expert also pointed out that compared to proton exchange membrane electrolysis, alkaline electrolysis has a lower capex of $ 925 per kilowatt today and is expected to be halved by 2030, enabling an equalized cost of $ 1 per kilogram of green hydrogen with land-based wind power.

For Malik and co-author Mingming Zhang, alkaline electrolysis and renewable energy from onshore wind power will produce the most cost-effective green crude steel in Sweden.

“Assuming a carbon dioxide price of $ 100 / ton, green steel producers could benefit from $ 85 / ton of carbon credits. Better financing models for onshore wind power and 48% lower capex for alkaline technology in 2025 give steel costs of $ 360-390 / ton. in coal price scenarios ranging from $ 50 / h to $ 150 / h, ”they estimated in the report.

In Zhang’s view, it is entirely possible to produce green steel with cost parity compared to conventional steel in the 2020s if natural gas-based processes for the production of direct reduction of iron and arc furnaces are used as the baseline.

“Global demand for steel will reach 1,872 Mt per year by 2030, 6.4% higher than in 2020. The background to green steel will grow stronger as costs decrease. In addition, the success of green hydrogen to produce green steel in commercial scale to justify the enthusiasm for its ability to accelerate decarburization, ”the analysts concluded.