The climate finance community should be watching Sweden. Swedish steelmaker H2 Green Steel (H2GS), founded in 2020 to produce (using renewable hydrogen), is completing a landmark €5 billion+ fundraise for its first plant in Boden, near the Arctic Circle in northern Sweden, 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.
Infrastructure project developers usually warn against having too many fellow equity co-investors, since joint decision-making can become cumbersome. For example, the landmark $3 billion Vineyard offshore wind project off the US east coast has just two equity investors — a private equity group and an electric utility.
H2GS, however, counts over 20 different equity investors (see table below). The types of equity investors range to Asian sovereign wealth funds and industrial corporates, which is also uncommon in large infrastructure projects. Given the H2GS announces every few weeks, the formula seems to be working.
