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Home TECH Start-up

How Sweden Turned Into a Climate Tech Funding Champion

In large part thanks to startups Northvolt and H2 Green Steel, Sweden's climate tech investments soared by 224% this quarter, pushing the country ahead of the UK, France and Germany in global rankings

byAmy Lewis
November 8, 2023
in Start-up
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Sweden ranked as the third-largest climate tech market with regard to funding with a 224% increase in investments this quarter, a recent BloombergNEF report finds. Bloomberg states that this huge leap forward for Swedish green tech is largely due to two startups: Northvolt and H2 Green Steel. They stand out in a vibrant climate investment scene where other notables include such active players as Modvion, Volta Greentech, and Einride.

The Bloomberg report looks at climate tech funding across a wide range of sectors, including transport, energy, industry, and agriculture sectors. It found the most funded sector to be energy, which received $7.4 billion in venture funding, after which comes transport with $4.6 billion, and industry with $2.9 billion.

The largest investment growth was focused around decarbonising heavy industry, the report states, in which we can see an increase of 84% in deal value. This is said to be due to investors doubling down on greener steel.

It also showed some significant global movement, with China now leading the world’s climate tech market in terms of funding, and the US in second place, but still in the lead when looking at the number of deals. 

For Sweden, this trajectory is promising — so, who are Northvolt and H2 Green Steel, and how did they produce such a noteworthy increase in Sweden’s climate tech funding?

Sweden’s up-and-coming startups: Northvolt, H2 Green Steel and Polarium

The two startups, together with energy storage company Polarium, founded in 2015, are three of Europe’s leading climate companies, and have secured €12bn of funding between them. All three have one thing in common: their co-founders, Harald Mix and Carl-Erik Lagercrantz. 

Northvolt was co-founded by the pair in 2015, after their co-establishment of Vargas, a green-tech investment company, in 2014. Northvolt develops and manufactures batteries, with a specialty in using lithium-ion technology to power electric vehicles.


Related Articles: Porsche to Start Using Low-Carbon Steel From 2026, Climate Tech Investments Over 60% Higher Than in Previous Quarter, Report Finds

The pair set up Northvolt with former Tesla Executive Peter Carlson and now CEO of Northvolt Paolo Cerruti, following Tesla’s decision to build a battery factory, Gigafactory Nevada, to produce battery cells for their cars.

Vargas then financed the launch of H2 Green Steel in 2020. The startup replaces coal with green hydrogen-powered fossil-free electricity, which the company claims to reduce CO2 emissions in the steel industry by 95%.

Where Northvolt’s founding has ties to Tesla, H2 Green Steel has entered into an agreement with Porsche, which now plans to use the startup’s CO2-reduced steel in its cars from 2026. 

The deal, announced in October of this year, aims to have H2 Green Steel supply around 35,000 tons of their low-carbon steel to Porsche annually, meaning that the startup would account for nearly 15% of Porsche’s steel requirements, thus becoming a big player in its supply chain.

What does this mean for Sweden?

The extensive backing of both startups is impressive, and contributed hugely to Sweden’s rapid ascent in the global tech funding rankings, Bloomberg believes.

H2 Green Steel raised €1.5 billion in equity to build the world’s first green steel plant in Boden, Sweden, set to open in 2025, and their investor group includes Altor, GIC, Hy24 and Just Climate.

Henrik Henriksson, CEO of H2 Green Steel, notes:

“The caliber of investors that are backing us is impressive. Some of the most professional institutions, investors and industrial companies globally are part of this round and we are proud that they all share our commitment to sustainability as their true north. €1.5 billion is the largest private placement in Europe this year and the appetite to invest in us proves both our solid business case and the market demand for green steel.” (bolding added)

Meanwhile, Northvolt secured $1.2 billion to fund expansion in Europe and North America. Its investors include the Investment Management Corporation of Ontario (IMCO), BlackRock, Canada Pension Plan Investment Board (CPP Investments), and Ontario Municipal Employees Retirement System (OMERS).

Global Head of Climate Infrastructure at BlackRock David Giordano told Reuters:

“The battery manufacturing sector has attractive growth potential driven by the accelerating adoption of battery storage and electric vehicles […] As a leading investor in the energy transition, we look forward to supporting their [Northvolt’s] continued growth.”

Overall, both Northvolt and H2 Green Steel have extensive international backing, and their contribution to Sweden’s green tech funding should not be overlooked. They represent two major examples of Sweden’s growing climate startup scene — other notables include Modvion, Volta Greentech, and Einride.


Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — In the Featured Photo: Northvolt Lab Featured Photo Credit: Image by Northvolt.

Tags: climate techClimate Tech fundingH2 Green SteelNorthvoltstartupstartupsSwedenSwedish Startups
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Amy Lewis

Amy Lewis

Amy holds a bachelor’s degree in Asian and Middle Eastern Studies with Arabic and French, and is an aspiring researcher and sustainability journalist. Her final year research focused on LGBTQIA+ representations in the Middle East through historic, anthropological and literary lenses. She aims to continue this research in a professional capacity, with a focus on how the persecution of queer and trans individuals is compounded by climate change, increasing the likelihood of their displacement as refugees. Beyond her academic and professional pursuits, Amy enjoys travelling, creative writing, and practising speaking other languages.

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