You have no items in your cart.
Northern Sweden has long struggled with de-population and unemployment but a new wave of fossil-free industry is now bringing hope for the future amidst the largest industrial investments in Swedish history. More than 150 years after industrialisation, Norrland’s gold – the forest and the iron ore – still plays a key role in Sweden’s prosperity. Thousands of jobs are created, but with big investments also come challenges. Below we explore the booming north in Swedish Norrland and what the challenges the areas face in not only attracting the workforce but to get people to stay.

The booming north
Norrland is considered one of the last wilderness areas of Europe. It covers roughly 60 % of Sweden with a large portion of it north of the Arctic Circle. The natural resources of Norrland have long been of great importance to Swedish industry and welfare. The area is sparsely populated and used to not making international headlines beyond reindeer and spectacular views of the Northern Lights. Those who live there have traditionally worked with mining, the army and forestry.
But an industrial boom is currently underway attracting not only media attention but historically large investments into the green industry to meet the demand for electric cars and fossil-free steel. Now, in the rapid transition to a more sustainable and fossil-free society, Norrland’s natural resources together with Swedish innovative power and entrepreneurial spirit are about to take Sweden into a completely new industrial era. Why Norrland? Because it abounds in hydro- and wind power and underneath the surface lies a key to Sweden’s welfare – iron ore.
This combination has created an industrial boom in northern Sweden. In May, Finance Minister Magdalena Andersson said that planned investments, including the production of fossil-free steel and electric vehicle (EV) batteries, will exceed SEK 1,000 billion in the next ten years. Thousands of jobs are being created and unemployment in many parts of northern Sweden is lower than in the rest of the country, thanks partly to the transition to green industry. “Job creation from the green transformation is not something that will happen in the future, it is happening in Sweden now,” Andersson said.
The requirement: cheap and (lots of) green energy
The global steel industry is one of the world’s largest emitters of carbon dioxide, representing approximately 7% of global CO2 emissions. Demand for fossil-free steel is growing substantially with strong interest from global market leaders in sectors such as automotive, commercial vehicles, white goods etc. Mining giant LKAB, steel group SSAB and battery factory Northvolt have already invested in an extremely power-hungry greening of production. Cheap renewable energy was a huge draw. It is still a few years away, but together the four companies will consume as much as half of today’s electricity production in Sweden, if the venture goes ahead.
Hydropower The history of hydropower in Sweden dates back to medieval times. The first known hydropower plants in Sweden were used for mills and to thresh seed in the 12th century. At the end of the 19th century hydropower plants were built for electricity production to light industries and households. The development of large-scale hydropower in Sweden started around 1900 when the Swedish government considered replacing stem engine power with power from waterfalls, especially for utilization in railway operation. Most of the Swedish hydropower was built in the 1950s and 1960s in the far north, with the aim of containing costs for its industry and being globally competitive. |

The cheap, environmentally friendly and reliable electricity in northern Sweden has previously served as a selling point when large companies were looking for places to establish themselves (e.g.. Facebook’s server hall in Luleå). At the same time, there is a loud debate raging about the unstable Swedish electricity grid, which among other things, is due to the lack of transmission capacity from the hydropower electricity in the north to consumers in southern Sweden. The pressure from the business community for a stable and substantial electricity production in the area will increase with the new establishments. Critics have flagged that it will not be the big industries that will be affected if there is a shortage of electricity. Instead, Swedes will see higher electricity prices, more problems with power outages and expensive short-term investments to meet the increased electricity demand. These problems will primarily affect southern Sweden because the transmission in the electricity grid from north to south is underdeveloped, according to current affairs magazine Fokus.
A special debate was held in the Riksdag on the issue on 5 March where the Minister for Energy, Anders Ygeman (S), emphasised that Sweden today has a large electricity surplus and that electricity has become greener, but that there are “challenges”. Among them, he mentioned that some cities cannot grow at the desired rate because the electricity networks do not have sufficient capacity and said that SEK 50 billion to expand the transmission network was on the way. Lorens Burman, Mayor of Skellefteå, points out that it will probably take ten years to increase the transmission capacity, but that the establishments in the north are taking place now: “It will be an interesting challenge for politicians to solve,” said Burman.
Norrbotten county – where LKAB’s and Boliden’s Kiruna and Aitik mines are located – accounted for around 11% of Sweden’s total greenhouse gas emissions in 2016. Gotland is the most emission-intensive county; the bulk of greenhouse gas emissions from Gotland’s economy come from emission-intensive industries and numerous shipping companies. While Norrbotten is the county with the second highest emission intensity after Gotland with its emission-intensive industries, the largest emission intensity reduction between 2017 and 2018 was noted in Norrbotten County. “Previously, it was the industry that was dragging down our climate work. But now it is the industry that is driving the change,” said the Mayor of Luleå, Carina Sammeli. Indeed, according to Hybrit, fossil-free steel production alone could reduce Sweden’s emissions by around 10%. “I think it is a bit of a window into the future, of what industrial development is going to look like even in other countries,” commented Mikael Nordlander, Head of R&D portfolio, Industry Decarbonisation at Vattenfall.
Västerbotten and Norrbotten already have a booming server farm industry that takes advantage of the region’s cool climate and abundant hydropower.
Green steel
The demand for steel doesn’t seem to slow down – on the contrary. Living standards in the world are increasing and steel is an important enabler for building a society and its infrastructure. But the steel industry is one of the highest carbon dioxide emitting industries accounting for 7% of emissions. In Sweden, Swedish steel manufacturer SSAB accounts for about 10% of the emissions. The steel making process involves burning fossil fuels, which releases large amounts of carbon dioxide. But what makes steel production so high in CO2 emissions? To make steel, iron ore must be melted at high temperatures and reduced from iron oxide to iron, a process that traditionally involves burning fossil fuels, releasing huge amounts of carbon dioxide. The villain of the piece is the blast furnace, which produces nearly 1.5 tonnes of carbon dioxide per ton of produced steel, and is used in the process of converting iron ore to steel. Blast furnaces are based on a technology that is 1000 years old (see chart from KTH). Now, this process is disrupted to be fossil free, and Sweden is aiming to be the first country in the world to produce fossil-free steel. “The most accessible way is to replace the fossil carbon with hydrogen. Then the residual product becomes water instead of CO2”, says SSAB’s Johan Martinsson. The hydrogen is made by electrolysing water, using electricity produced by hydro-power. This approach involves almost no carbon-dioxide emissions at all.
There are currently two green steel projects running in Sweden; Hybrit – a joint venture between Vattenfall, LKAB and SSAB that aims to produce fossil-free steel in Gällivare – and upstart H2 Green Steel, which aims to produce five million tonnes of fossil-free steel by 2030 in Boden where Hybrit has a small-scale, pilot fossil-free steel plant. Both ventures have offensive plans to export the steel within a few years. Hybrits’ pilot plant in Luleå has already started to produce fossil-free steel and Volvo will use the steel to build lorries. The demonstration plant in Malmberget will start in 2026 and by 2045 LKAB and SSAB aim to be completely fossil-free.
A range of leading European companies and funds have invested into Swedish start-up H2 Green Steel, which aims to build the first large factory for emissions free production of steel. So far H2 Green Steel has landed investments of $105 million from the likes of the Agnell, Wallenberg and Maersk families as well as Mercedes Benz, Scania, IKEA and CEO of Spotify, Daniel Ek. H2 Green Steel hopes to start production by 2024 in northern Sweden and aims to produce 5 million tonnes of emission free steel by 2030, a small but meaningful percentage of the 90m tonnes that is currently consumed annually in the EU. “We want to accelerate the transformation of the European steel industry. Electrification was the first step in reducing carbon dioxide emissions from the transportation industry. The next step is to build vehicles from high-quality fossil-free steel,” said Carl-Erik Lagercrantz, Chairman of the Board of H2GS and Northvolt.
Batteries
The construction of Northvolt’s electric car battery factory in Skellefteå is one of the largest industrial investments in Swedish history. It all started in 2017 when Northvolt was looking for a place to build its battery manufacturing factory. Skellefteå was not on their list of potential locations. But Skellefteå had done its homework well in advance and had listed the advantages prospective companies would find in their municipality. “We saw that we could match the demands presented in the enquiry that had been sent out to most municipalities in Sweden and Finland. Our offer was based on centrally placed industrial areas and access to ample renewable energy, a long industrial tradition with competence from process industries within the region,” said Anja Palm, Business Manager at Skellefteå municipality. According to Northvolt, access to the hydropower infrastructure in Skellefteå was essential in making the choice, as local electricity costs are around one third of those in Germany and one fifth of those in China. Further, the overall carbon footprint for Northvolt’s batteries would be around a quarter of that of an equivalent power pack from China.
At full capacity, Northvolt Ett will produce enough lithium batteries to supply 800,000 cars a year. This makes it the largest car battery factory in Europe. It will run 24/7 all year round and all production will be automatic. The aim is, according to Northvolt’s Chairman of the Board, Carl-Erik Lagercrantz, to scale up to 50 gigawatt-hours a year. That would account for a sizeable amount of the European Union’s expected annual demand of some 450 gigawatt-hours of electric-vehicle battery capacity by 2030.
Meanwhile, Scania is also hoping to exploit Norrland’s cheap hydro-power by making 15,000 battery-powered trucks a year by 2025, around 15% of its annual production.
Linked to the construction of new battery factories, interest is increasing in extracting the metals and minerals needed. The clearest example is Talga Resources’ plans for a large graphite mine outside Vittangi.
A societal transformation
Surprisingly, in return for being the catalyst to the Swedish economic engine, Norrland is used to receiving relatively little back in terms of welfare and access to infrastructure and services usually taken for granted in urban areas. The region is predominantly made up of a working-class demographic that populates large swathes of land sparsely. Most of the privatisation reforms have benefited densely populated-Stockholm more than Norrland, and the closure of police stations and other services result in limited access to essential welfare sectors, like healthcare and education. This now has to change – rapidly – to accommodate the people needed to support the industrial boom in northern Sweden.
With the many green mega-projects taking place in Norrland, authorities are calculating that the number of inhabitants may jump by 20% by 2035, as 10,000 workers are needed to power the new northern projects and another 90,000 are needed to support various sectors as local demand is projected to increase. But there is a risk that the workforce is not enough and that the necessary expansion of the electricity supply will not be completed in time. Northvolt plans to start production at the end of this year with people with the right skills in place – a not altogether easy task since the battery sector is relatively new to Sweden. There is therefore a need to quickly develop skills as climate change and technological developments are bringing about a quicker rate of change in the labour market. At a meeting of Nordic employment ministers and labour market parties on 2 June, researchers warned of a divided Nordic labour market and that developing skills in the adult workforce and investing in lifelong learning
Thousands of jobs are created, but with big investments come also challenges. This means that sectors like construction could receive some wind in their sails as there is not enough property to house new workers and school their children, and so forth. But amid this surge of activity, local councils are feeling the pressure as builders are given months to prepare housing projects. According to The Mayor of Luleå, Carina Sammeli, the city will need an extra 25,000 new residents to fill the demand for labour over the next 20 years. “We haven’t grown much for years and haven’t really needed to build much until recently. Now we have big challenges in terms of planning, water and sewage capacity in order to build new residential areas.” On top of that, there will be jobs in new schools, nurseries, shops, restaurants and other services. Several actors are now working with different types of forecasts and scenarios to try to create a picture of the future. Skellefteå bus has, for example, developed a vision that includes call-controlled public transport, in the form of smaller vehicles controlled by artificial intelligence.
But to support the societal transformation underway – and for the industry transformation to go fast enough – there are structural and administrative changes required. The obstacles along the way are the same for all industries that need to be electrified and reorganised. In order for the industry’s transformation to go fast enough, the state must now secure its value chain and review regulations and long permit processes, the CEOs of LKAB, SSAB and Vattenfall argued in a debate article in mid May. The main obstacles, they argued, are the need for shorter lead times for environmental permits, expanded and modernised electricity networks, new infrastructure and the right conditions for fossil-free hydrogen.
Comment
Available in subscriber version only.
Photo: Pexels