What is claimed to be the world’s largest plan yet for a 'green steel' plant fuelled by renewable hydrogen is slated for Sweden under a €2.5bn ($3bn) venture backed by the billionaire CEO of music streaming service Spotify and other investors.

H2 Green Steel aims to set up a plant in Sweden’s northern Norrbotten region that will start operations as soon as 2024 and be producing five million tonnes by 2030, with processing fuelled by H2 made using large-scale renewable power supplies available regionally.

Initial investors in the venture include Spotify co-founder Daniel Ek, fellow Swedish billionaire Cristina Stenbeck, European investment platform EIT InnoEnergy and vehicle group Scania.

Using green hydrogen to produce steel and other metals instead of relying on fossil-based fuel sources is seen as one of the big wins of the energy transition, with a number of initiatives underway around the world by players including established industrial giants such as ThyssenKrupp.

But H2 Green Steel said it is the first to plan from scratch a large-scale foray into the green steel sector, in a move it said would help the EU to meet its objectives to spur a renewable hydrogen economy as part of the bloc’s 2050 net zero plans.

EIT InnoEnergy CEO, Diego Pavia said: “The H2 Green Steel initiative has the scale, ambition, innovative business model and implementation team to become a flagship of Europe’s position at the forefront of the transformation of energy-intensive industries.

“This case, which is replicable, is key to deliver on Europe’s climate neutrality pledges.”

The area of Sweden slated for H2 Green Steel is already home to a cluster of similar industrial initiatives, including the HYBRIT green metals pilot plant set up by utility Vattenfall and others.

In Carl-Erik Lagercrantz, H2 Green Steel also shares a chairman with Northvolt, the Swedish battery start-up that has rapidly emerged as a key player in that sector. Investment group Vargas, one of the early investors in H2 Green Steel is also a backer of Northvolt.

Northern Sweden, and Scandinavia generally, have emerged a hotbed of large-scale renewables development, with major wind projects planning to sell power to industrial customers, and large data centres run by technology giants such Google and Facebook.

Despite the huge interest in using green hydrogen to decarbonise the steel industry, which is responsible for around 7% of global emissions, some have expressed scepticism over how big a role renewable H2 can play, with a report from the International Energy Agency last year claiming it will end up being relatively minor.