Kingspan, Ireland building materials company, is investing in a Series A equity fundraising round in H2 Green Steel (H2GS), H2 bulletin reports.
Investment round A is due to close this month with other pioneering investors includes Scania, the IMAS Foundation and Vargas. The total required financing for the first phase of the project is around € 2.5 billion (US$ 3 billion), which would mainly be financed through green project financing.
With the expected single-digit stakes, Kingspan also eyes a long-term supply agreement with H2GS, which make Kingspan the first building materials company committed to procuring hydrogen-based green steel at scale.
Building and construction are the major end-users of steel, accounting for 52% of global demand, followed by the vehicles industry, which consumes 12% steel. It is estimated that the steel industry accounts for 7% of emissions emitted globally.
H2GS plant is planned to be built in the Boden-Luleå region in northern Sweden. Steel production is expected to start in 2024, where the production will reach 5 million tonnes/year by 2030. H2GS aims to produce green steel with innovative steelmaking methods using hydrogen to curb emission.
H2GS employs a process that would replace coke and coal with green hydrogen making steelmaking almost emission-free. This implies that one tonne of H2GS steel will release just less than 0.1 tonnes of CO2 compared to over 2 tonnes of CO2 while using traditional steelmaking. The plant will use green hydrogen produced through electrolysis by using power sourced from hydropower and wind power.
Almost 65% of Kingspan’s business revenue comes from the sale of its insulated panels. The green steel will help Kingspan reduce carbon usage in its insulated panel products by around 45%, helping the company to achieve its 2030 goal of cutting scope 3 emissions from its supply chain by 50%, resulting 35% reduction in the Group’s scope 3 emissions.
Gene Murtagh, CEO of Kingspan Group, said, “The building industry is a major user of steel, and steel production is a major source of carbon emissions.”
Carl Erik Lagercrantz, Chairman of the Board of H2 Green Steel, said, “Steel is a vital input in many industry verticals, but the extent of its contribution to emissions from the building and infrastructure sector is not well understood, and green steel will be an important component as it seeks to decarbonise.”