© Stegra

Microsoft has agreed to procure hydrogen-based steel from Stegra’s planned facility in northern Sweden and to buy environmental certificates linked to the steel’s emissions profile, in a move aimed at reducing the carbon footprint of its expanding data centre infrastructure.

Corporate buyers move into green steel

The agreement ties one of the world’s largest technology companies to one of the first commercial-scale attempts to produce steel using green hydrogen rather than coal. The deal highlights how corporate buyers outside the automotive and construction sectors are beginning to engage directly with low-carbon steel supply chains, even as developers struggle to finance large hydrogen projects.

Dual structure: steel and certificates

Under the two-part arrangement, Microsoft will work with its equipment suppliers to ensure that coils of Stegra’s steel are used in some European data centres. In parallel, it will purchase environmental attribute certificates (EACs) that separate the steel’s emissions savings from the physical product. This allows Stegra to sell the material into the wider market as conventional steel, while Microsoft claims the associated reductions. “Through the EACs, the green value can be sold to Microsoft – a player of a unique size that can really help move the needle in the right direction,” said Henrik Henriksson, Stegra’s chief executive.

Microsoft’s climate strategy

Melanie Nakagawa, Microsoft’s chief sustainability officer, said the certificates would help “signal demand, enable project financing, and accelerate global production”. She added that the company’s “end game is to source physical materials with the lowest possible CO₂ footprint,” though limited supply means it must rely on certificates in the near term.

Stegra’s boden project

Stegra, formerly known as H2 Green Steel, is constructing a multibillion-euro plant in Boden, just south of the Arctic Circle, which is due to start operations in late 2026. Backed by €6.5bn from private investors, the facility will use 740MW of electrolyser capacity powered by hydro and wind to convert iron ore into steel through direct reduction and electric arc furnaces. The company expects to produce 2.5mn tonnes of steel annually by 2028, rising to 5mn tonnes by 2030, with more than half of its first-phase output already covered by offtake agreements with automotive and industrial customers.

Financing challenges

The venture has faced financial headwinds after Sweden’s Environmental Protection Agency withdrew €165mn in previously approved grant funding, citing concerns over limited fossil gas use in a heat-treatment process. Stegra maintains the project will still cut emissions by up to 95 per cent compared with conventional blast furnaces. Thyssenkrupp Nucera has begun supplying alkaline electrolyser modules for the on-site hydrogen facility.

Implications for industry and policy

Microsoft, which invested in Stegra through its $1bn Climate Innovation Fund, is the first company to commit to buying certificates from a steelmaker. Analysts say the structure could provide a model for financing early-stage industrial decarbonisation. Claire Dougherty of energy think-tank RMI said the agreement “serves as a proof-of-concept for the role that certificates can play in getting first-of-a-kind, near-zero steel projects off the ground.”

With the steel industry responsible for 7–9 per cent of global carbon emissions, efforts such as this could help to create new demand signals across sectors. For policymakers, the deal underscores both the potential and the fragility of green hydrogen projects: while corporate offtake can accelerate investment, high costs and regulatory hurdles continue to cast uncertainty over the pace of deployment.