The Stegra green steel plant in Boden, Sweden, a flagship project in the nation’s decarbonization drive, is experiencing significant delays and financial strain, undermining Sweden’s once-ambitious climate leadership. The facility, designed to produce 1.2 million tons of low-carbon steel annually by 2029, has seen construction progress fall behind schedule by nearly 18 months.
- Stegra plant in Boden, Sweden, delayed by 18 months, now projected for 2027 completion
- SEK 28 billion (approx. $2.8B USD) investment committed, with SEK 4.2 billion in funding shortfall
- Only 48% of construction completed as of Q4 2025
- Swedish Energy Agency provided SEK 1.5 billion in conditional grants
- Stegra’s delay threatens Sweden’s goal of 30% green steel production by 2030
- European steel buyers shifting contracts to Norway and the Netherlands
The Stegra green steel factory in Boden, Sweden, is emblematic of the country’s aspirations to become a global leader in sustainable industrial production. Announced in 2021 with a planned launch in 2025, the plant was set to utilize hydrogen-based direct reduced iron (H-DRI) technology to eliminate carbon-intensive coke in steelmaking. However, construction timelines have slipped, with the current completion date now projected for late 2027. As of Q4 2025, only 48% of the project’s structural work has been completed, despite a total investment commitment of SEK 28 billion (approximately $2.8 billion USD). Financial challenges have emerged as a critical obstacle. The project has encountered a SEK 4.2 billion shortfall in funding, primarily due to rising costs for electrolyzers and green hydrogen infrastructure. Investor confidence has waned, with two major European energy firms reducing their equity contributions by 30% in late 2025. The Swedish Energy Agency has stepped in with an additional SEK 1.5 billion in conditional grants, but only if emissions targets are met and delivery timelines are revised. The stalled progress has broader implications for Sweden’s climate policy and industrial competitiveness. The government had pledged that green steel would account for 30% of domestic production by 2030, a target now under threat. Competitors in Finland and Norway are accelerating similar projects, with Norway’s Hybrit pilot facility already producing commercial quantities of fossil-free steel. Meanwhile, European Union carbon border adjustment mechanisms (CBAM) may penalize steel imports from countries with high emissions, placing Sweden at a disadvantage if Stegra fails to meet its 2027 deadline. Market observers note that the delay could reconfigure Europe’s green industrial landscape. Steel buyers in Germany and the Netherlands are now diversifying supply chains, with contracts being signed with Norwegian and Dutch green steel producers. The uncertainty surrounding Stegra has also affected investor sentiment in Sweden’s green tech sector, causing a 12% drop in green infrastructure ETFs linked to Nordic firms in 2025.