Swedish green iron and steel producer Stegra has announced two significant agreements with Microsoft to advance the utilisation of near-zero emission steel in the technology company’s datacenter operations. Established in 2020, Stegra employs hydrogen, generated through green energy, to remove oxygen from iron oxide, significantly reducing CO2 emissions, while also using electricity entirely from renewable sources for its manufacturing processes.
The first agreement involves the supply of low-carbon steel from Stegra’s Boden facility. The second introduces a system of environmental attribute certificates (EACs) linked to the production of this steel. Stegra’s CEO, Henrik Henriksson, remarked, “Sustainable change calls for unconventional partnerships. We are now teaming up with a market leader in Microsoft, to demonstrate how we can work together to accelerate change in the steel industry.”
Under the physical supply agreement, Stegra will provide steel manufactured with up to 95% fewer emissions compared to traditional methods. Although Microsoft does not purchase raw materials directly, it collaborates with suppliers who will receive steel coils from Stegra and process them into components for Microsoft’s datacenter equipment.
The EAC agreement allows the environmental value of green steel to be separated from the physical product, enabling the steel to be sold conventionally while the associated emissions reductions are traded through certificates. Buyers of the physical steel must refrain from making sustainability claims to prevent double counting, allowing Microsoft to apply the EACs towards its carbon reduction objectives.
Melanie Nakagawa, Chief Sustainability Officer at Microsoft, stated, “The end game is to source physical materials with the lowest possible CO₂ footprint. Achieving this requires greater volumes of low-carbon steel available in more regions. But when physical delivery isn’t yet feasible, signing agreements for environmental attribute certificates demonstrates that emissions reductions are possible in the value chain through credible market mechanisms. Moreover, through tools like this, we aim to signal demand, enable project financing, and accelerate global production.”
These agreements build on Microsoft’s 2023 investment in Stegra through its Climate Innovation Fund.
