Sweden green steel needs lower power, higher CO2 prices

A Swedish pilot project to demonstrate steel production without CO2 emissions will require an electricity price below EUR 26/MWh and a carbon price above EUR 132/t to be more profitable than the developer's current business.

The projections of power and carbon prices for green steel production emerged from a report by the Scandinavian Institute for Public Policy, published on Tuesday, on behalf of a pilot project organised by Swedish steel producer LKAB.

Under current market conditions, the front-year Nordic power futures contract is hovering above EUR 41/MWh and Europe's benchmark carbon price is below EUR 66/t.

LKAB previously said it planned to complete the pilot by 2026, a project that would assess annual power consumption of 5 TWh.

The institute said it would make more financial sense for the company to focus on producing high quality steel pellets, based on global demand expectations.