Swedish green iron and steel maker Stegra announced two agreements with Microsoft aimed at advancing the use of near-zero emission steel in the technology company’s datacenter operations.
Founded in 2020, Stegra utilizes hydrogen produced using green power to remove the oxygen from iron oxide, avoiding most of the CO2 emissions normally produced, and uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.
The first agreement made with Microsoft covers the supply of low-carbon steel from Stegra’s Boden facility, while the second introduces a system of environmental attribute certificates (EACs) tied to the production of that steel.
Henrik Henriksson, CEO of Stegra, said:
“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.”
The physical supply deal will see Stegra deliver steel produced with up to 95% fewer emissions than conventional methods.
While Microsoft does not directly purchase raw materials, it will work with suppliers who will receive coils from Stegra and process them into components for Microsoft’s datacenter equipment.
The EAC agreement separates the environmental value of green steel from the physical product. The steel itself can be sold as conventional, while the associated emissions reductions are sold through certificates.
As such, buyers of the physical steel must agree not to make sustainability claims, preventing double counting. Microsoft can then apply the EACs toward its carbon reduction goals.
Melanie Nakagawa, Chief Sustainability Officer at Microsoft, said:
“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.”
The agreements build on Microsoft’s 2023 investment in Stegra through its Climate Innovation Fund.
