The Hybrit (Hydrogen Breakthrough Ironmaking Technology) initiative — a joint venture between utility Vattenfall, mining company LKAB and steel firm SSAB — has received €143m ($158m) of grants from the EU Innovation Fund, which will mainly be spent on the world’s first large-scale demonstration project, to be built in Sweden.

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The JV uses hydrogen instead of coke (a form of coal) to provide both the high-temperature heat and oxygen removal required to turn iron ore (iron oxides) into pure sponge iron, in a process known as direct reduction.

It is currently the only commercially available method to decarbonise steel production, which is responsible for about 8% of the world's greenhouse gas emissions.

Hybrit produced the world’s first ever fossil-fuel-free steel back in 2020, and delivered a first shipment of “green steel” to Volvo in August last year.

A total of €108m of the new funding will go towards the pilot in Gällivare, in the north of the country, which will produce about 1.2 million tonnes of emission-free crude steel annually — a quarter of Sweden’s yearly production — using direct reduction using hydrogen produced from 500MW of electrolysers.

A further €30m will be spent on two new electric-arc furnaces at SSAB’s plant in the town of Oxelösund, near Stockholm, to melt the sponge iron, and the final €5m was awarded for the demonstration of fossil-free iron-ore pellets for the hydrogen reduction process.

The projects will reduce carbon emissions by 14.3 million tonnes over the first ten years of operation.

The EU cash was first announced by the European Commission in November last year, but the exact amount was not revealed until today, when the grant agreements were signed and the money handed over.

“Hybrit is paving the way for a fundamental change in the global steel industry,” said Frans Timmermans, executive vice-president of the European Commissio, who is responsible for the European Green Deal. “It also demonstrates how fast the green transition can happen: a few years ago, the possibility of producing emission-free steel would have sounded like science fiction. Now, green steel is entering the market.

“The support granted via the Innovation Fund is testament to the importance and potential of this technology, and the European Commission is convinced that this cutting-edge project will boost the European Union’s overall competitiveness. Green steel has the future, and that future is already here.”

The EU Innovation Fund today handed over a total €1.1bn to seven projects, including Hybrit, a cross-border carbon capture and storage (CCS) scheme in Belgium, a bioenergy CCS facility in Sweden, a waste-to-methanol project in Spain, carbon-neutral cement in France, and an industrial-scale manufacturing line for high-performance solar panels in Italy.