A first-of-its-kind pilot plant to produce steel without the use of fossil fuels is being planned for Sweden.
Steel firm SSAB, mining company LKAB and Vattenfall will fund half of the HYBRIT initiative, with the Swedish Energy Agency providing the other half of the money.
The planning and designing stage is expected to cost SEK20 million (£1.8m).
The firms say the initiative could reduce Sweden’s total carbon dioxide emissions by a tenth and those in Finland by 7%.
Their aim is to have set up a totally fossil-free process for steel production by 2035.
Given the current price of electricity and carbon dioxide emissions, fossil-free steel would be up to 30% more expensive than normal production of the metal but it is expected to prove competitive in the future as prices of renewables continue to fall.
Erik Brandsma, Director General at the Swedish Energy Agency, said: “With our commitment to the HYBRIT initiative, we are contributing to the long-term competitiveness of the Swedish steel industry and gearing up work on the unique green energy systems in Sweden.
“In addition, we help driving the transition to a fossil-free industry and a sustainable society.”