Economic Viability of Stegra Green Steel Project Under Scrutiny
Expert analysis raises concerns about the economic sustainability of Sweden's Stegra green steel project, citing potential billions in losses.
- • Stegra project may incur societal losses of 15 to 24 billion euros, according to economic analysis.
- • High production costs and electricity needs raise doubts about the project's sustainability.
- • Critics suggest resources may be better allocated elsewhere, impacting local electricity rates.
- • Optimistic assumptions could enhance the project's viability if electricity prices stabilize.
Key details
The economic feasibility of the Stegra green steel project in Boden, Sweden, is drawing mixed reactions from experts. A recent analysis by professors Per-Olov Johansson and Bengt Kriström raises significant concerns, suggesting that the project could generate societal losses ranging from 15 to 24 billion euros. They argue that this substantial deficit stems from high production costs linked to the need for extensive fossil-free electricity and the anticipated impact on local electricity prices. Specifically, the Stegra project aims to produce five million tons of green steel annually, consuming 20 terawatt-hours of electricity per year at projected costs of 71 euros per megawatt-hour, which includes grid expansion expenses.
Johansson and Kriström's critique highlights the opportunity cost of focusing resources on the Stegra initiative, which they believe could be better allocated to other projects, potentially alleviating the inflationary pressures on electricity costs faced by households and businesses in Northern Sweden. Furthermore, they draw attention to the possibility that cheaper imported steel could exacerbate the project's challenges, further jeopardizing its economic viability.
Conversely, Jonas Grafström, the article's author, reflects a more optimistic stance, arguing that some initial assumptions in Johansson and Kriström's analysis may be overly negative. He suggests that if historical trends of electricity prices continue or if public willingness to pay for green steel increases, the economic forecast for Stegra could improve. Grafström asserts that innovative ventures often appear unfeasible until successful, emphasizing the need to view the project's potential within a larger context of economic transformation and sustainability.