Some of these automakers, including Volvo, which it acquired from Stegura and rival SSAB, promote cars made with green steel as “fossil-free.” Additionally, there are many parts in cars and trucks that are much more expensive than the steel they use, so for the automaker, slightly more expensive steel adds only a small amount to the vehicle’s price, probably no more than a few hundred dollars. And some estimates. Many companies also have internal goals to reduce emissions, and purchasing green steel can help you get closer to those goals.
Stegra’s business model is partially made possible by the unique economic conditions within the European Union. In December 2022, the European Parliament approved tariffs on carbon-intensive imported products such as steel, known as the Carbon Border Adjustment Mechanism (CBAM). As of 2024, the law requires companies that import iron, steel, and other goods to report the carbon emissions associated with that material.
From 2026, companies will have to start paying a fee designed to be proportionate to the carbon footprint of their materials. Some companies are already betting that Stegra’s 30% premium can be well worth it.
Stegura
Charlotte Unger, a researcher at the Institute for Sustainability in Potsdam, Germany, said the law could encourage decarbonization for steel importers in and into the EU, but green steel makers would probably be less likely to scale up. He said subsidies would also be needed to cover costs. In Stegra’s case, it will receive 265 million euros from the European Commission to support the construction of the factory. It also received €250 million in funding from the European Union’s Innovation Fund.
Meanwhile, Stegra is working to cut costs and increase profits. Chief Digital Officer Olof Haenel says the company has invested heavily in digital products to improve efficiency. For example, semi-automatic systems are used to increase or decrease electricity usage in response to changing prices on the power grid.
Stegra realized that sophisticated software did not exist to help the company track the emissions generated at each stage of the steelmaking process. So the company is developing its own carbon accounting software, which it plans to sell soon as part of a new spin-off company. Hahnel said this kind of accounting is important for Stegura because “we are asking for a significant amount of premium, and that premium only exists within the scope of our promise to reduce carbon emissions.” states that it is very important.