ESG Today writes that the funding will be used to help the company transition from coal-fired furnaces to electric arc models, which will run on fossil-free renewable energy. The money will be made available through EU’s Just Transition Fund, established in 2021 to ensure that the EU’s shift to a net zero economy over the coming decades is fair and inclusive. This is mostly to support fossil-dependent communities or the industries that are hard to abate in the transition.

Demand for low-carbon steel is expected to increase significantly in the future, as more and more industries, such as the automotive one, will switch to the clean alternative in order to reduce vehicle lifecycle emissions. Last year, Scania signed an agreement with the Swedish steel manufacturer for the delivery of 100% sustainable steel from 2030, as it plans to cut the emissions associated with the production of the company's electric trucks.

SSAB officials decided earlier this year to open a new clean steel manufacturing site in Sweden, which will produce around 2.5 million tons of green steel per year, but the company estimated the required investments at 4.5 billion euros. To further cut on the carbon footprint, the factory won't just use renewable power, but recycled steel, as well.

Through the project, Sweden's overall carbon emissions could drop by 7%, according to SSAB representatives.

Margrethe Vestager, European Commission Executive Vice-President in charge of competition policy said that "this €128 million measure enables Sweden to help SSAB accelerate its switch to electrified steelmaking at its steel plant in the Norrbotten region. This will contribute to the greening of the steel value chain, in line with the EU’s target of climate neutrality by 2050. At the same time, the measure ensures that competition is not distorted."