FerroSilva: Innovating Fossil-Free Sponge Iron Production

Swedish biomass steelmaking project targets 2026 production start

A Swedish research partnership is developing a method to make low-carbon steel using forestry residues instead of coal or hydrogen. The FerroSilva project, led by universities and industrial partners, aims to produce its first commercial output by 2026 or 2027. If successful, it could offer UK manufacturers an alternative supply route for green steel that doesn’t depend on large-scale renewable electricity infrastructure.

The approach differs from hydrogen-based methods now gaining attention across Europe. Instead, it uses established gasification technology to convert wood waste into synthesis gas. That gas then reduces iron ore into sponge iron in a shaft furnace. The process generates biochar and biogenic carbon dioxide as byproducts, both of which have potential commercial uses.

For UK businesses tracking decarbonisation in their supply chains, the project matters because it represents a parallel route to low-carbon steel. It also highlights how biomass-rich regions might compete with hydrogen hubs in the race to supply green metal. Understanding these competing pathways will help businesses make informed sourcing decisions as the steel sector transitions away from blast furnaces.

How the FerroSilva process works in practice

The method starts with forestry and agricultural residues collected from Swedish forests. These materials are gasified to produce a cleaned synthesis gas. That gas is then fed into a shaft furnace, where it chemically reduces iron ore into direct reduced iron, or DRI. The resulting sponge iron can be melted in electric arc furnaces to make finished steel products.

The project was initiated in 2020 by KTH Royal Institute of Technology, Chalmers University of Technology, Ovako, Sveaskog, and several other partners. According to a 2023 feasibility study cited in project materials, the method was found to be cheaper than other European green sponge iron concepts, particularly in regions with strong biomass availability.

The first planned industrial plant is scheduled for Ovako’s Hofors site in Sweden. It will have a target capacity of 50,000 tonnes of DRI per year. Production is expected to begin around 2026 or 2027, depending on financing and regulatory approvals. Global Energy Monitor lists the partnership as an R&D initiative announced on 27 April 2021.

Project documentation claims the process uses 90% less electricity per year than hydrogen alternatives. It also states a global warming potential of minus 845 kilograms of CO₂ per tonne of crude steel produced, assuming capture or reuse of the biogenic CO₂ stream. Furthermore, the project suggests it could increase utilisation of forestry residues in Sweden by 40%.

Comparing biomass reduction with hydrogen-based routes

Hydrogen direct reduction has attracted significant investment across Europe, particularly in Sweden, Germany, and Spain. However, it requires vast amounts of renewable electricity to produce green hydrogen through electrolysis. Consequently, projects often face delays tied to grid capacity, electrolyser supply chains, and hydrogen storage infrastructure.

FerroSilva’s biomass route sidesteps some of these bottlenecks. Gasification technology is mature and widely used in chemical plants. Shaft furnaces for direct reduction are also proven at industrial scale. Therefore, the main technical risks lie in integrating these established processes and managing the biomass supply chain sustainably.

The claimed electricity savings matter for grid-constrained regions. In the UK, where network capacity is under pressure from heat pumps, electric vehicles, and data centres, any steelmaking route that reduces peak electricity demand could ease infrastructure planning. Similarly, businesses concerned about energy costs may find biomass-based steel more predictable in price than hydrogen-dependent alternatives.

Nevertheless, the environmental case depends entirely on biomass sustainability. If forestry residues are harvested faster than forests can regenerate, or if they displace other uses with lower carbon impacts, the net climate benefit disappears. Therefore, lifecycle assessments must account for land use, transport emissions, and alternative uses of the same biomass.

Carbon accounting and the negative emissions claim

FerroSilva’s claim of a negative carbon footprint rests on specific assumptions. The process captures biogenic CO₂ released during gasification. If that CO₂ is permanently stored or used in ways that avoid fossil emissions, the overall carbon balance can theoretically turn negative.

Biogenic carbon comes from plants that absorbed atmospheric CO₂ during growth. Consequently, releasing it during gasification is often treated as carbon-neutral in lifecycle assessments. However, capturing and storing it creates a net removal of CO₂ from the atmosphere. This is similar in principle to bioenergy with carbon capture and storage, or BECCS.

For UK businesses reporting Scope 3 emissions, the treatment of biogenic carbon varies by framework. PAS 2050 and the GHG Protocol both allow separate reporting of biogenic emissions. Nevertheless, many corporate buyers and public sector frameworks now scrutinise these claims more closely. Therefore, steel producers will need transparent accounting and third-party verification to satisfy procurement requirements.

The biochar byproduct also affects the carbon balance. If biochar is used as a soil amendment or in construction materials, it can lock carbon away for decades or centuries. However, if it’s burned for energy, the carbon is released immediately. Consequently, the commercial fate of byproducts will influence the overall environmental performance of any biomass-based steelmaking process.

Why this matters for UK supply chains and procurement

UK manufacturers relying on steel imports need to track these developments for several reasons. First, public sector buyers are tightening carbon requirements in procurement. PPN 06/21 mandates carbon reduction plans for high-value contracts. In addition, many frameworks now ask suppliers to report embodied carbon in materials, including steel.

Second, the Steel Product Environmental Product Declaration, or EPD, scheme is gaining traction across Europe. EPDs provide standardised carbon data for construction and manufacturing projects. As a result, steel produced through lower-carbon routes will carry better environmental credentials. This can influence project selection, particularly in green building schemes like BREEAM.

Third, corporate buyers are setting science-based targets that include supply chain emissions. Consequently, companies with high steel consumption face pressure to source from lower-carbon suppliers. Biomass-based routes like FerroSilva could offer diversification away from hydrogen-dependent sources, reducing risk if hydrogen infrastructure lags expectations.

However, UK businesses should also consider trade-offs. Biomass availability varies by region. Sweden has abundant forestry residues, but scaling the approach globally would require vast land areas. Therefore, biomass steel may remain a niche solution rather than a universal replacement for coal-based production.

Transport emissions also matter. Importing Swedish steel to the UK incurs shipping costs and carbon. Consequently, businesses must weigh the benefits of lower production emissions against higher logistics impacts. For some applications, domestic scrap-based steel from electric arc furnaces may still offer the lowest total footprint.

Biomass steelmaking claims and commercial realities

• FerroSilva uses forestry residues and gasification to produce direct reduced iron, targeting a first plant output of 50,000 tonnes per year by 2026 or 2027.
• The project claims 90% lower electricity use than hydrogen-based methods and a negative carbon footprint under certain assumptions about CO₂ capture and byproduct use.
• The approach links steel, forestry, and energy sectors, creating potential co-products like biochar and biogenic CO₂ for use in other industries.
• Environmental performance depends heavily on sustainable biomass supply, transparent carbon accounting, and third-party verification of lifecycle claims.
• UK manufacturers should monitor biomass-based steel routes as an alternative to hydrogen-dependent supply chains, particularly for Scope 3 reporting and green procurement compliance.
• The commercial viability of the process beyond pilot scale remains uncertain and will depend on biomass costs, carbon pricing, and demand for low-carbon steel products.

What UK businesses should consider now

Companies with significant steel consumption should begin tracking alternative supply routes. As hydrogen projects face infrastructure delays, biomass-based methods may reach commercial scale sooner in certain regions. Therefore, maintaining awareness of these developments allows for better contingency planning in procurement strategies.

For businesses reporting Scope 3 emissions, understanding how different steelmaking routes are assessed matters. Frameworks like our compliance support for carbon reporting help companies navigate the treatment of biogenic carbon and lifecycle boundaries. Consequently, early engagement with these technical details prevents last-minute complications in annual disclosures or tender submissions.

Public sector suppliers should pay particular attention. The UK government’s net zero commitments are filtering into procurement criteria across central and local government contracts. As a result, suppliers able to demonstrate lower embodied carbon in steel components may gain competitive advantages in bidding processes. This trend will intensify as carbon pricing mechanisms expand.

Manufacturers should also consider the broader shift in steel markets. Europe is moving faster than many other regions on decarbonisation. Consequently, UK businesses importing from or exporting to European markets will need to match evolving carbon standards. Understanding the range of available technologies, from hydrogen to biomass to electric arc furnaces, helps businesses make informed decisions about supply chain resilience.

Finally, companies should watch for third-party verification schemes. As green steel claims multiply, independent certification will become essential to avoid greenwashing risks. Buyers should ask suppliers for Environmental Product Declarations, lifecycle assessments, and evidence of sustainable biomass sourcing. Robust documentation protects both buyer and supplier from reputational and compliance risks.

Further information on steel decarbonisation and supply chains

The UK government’s Department for Energy Security and Net Zero provides policy updates on industrial decarbonisation and net zero targets. Their publications cover funding schemes, carbon pricing, and sector-specific transition plans relevant to manufacturing and construction industries.

For technical guidance on carbon accounting for biogenic emissions, the Greenhouse Gas Protocol offers detailed standards used globally for corporate and product lifecycle assessments. These standards inform how businesses should report emissions from biomass-based processes.

The Institute of Environmental Management and Assessment publishes guidance on environmental management systems and sustainability reporting for UK businesses. Their resources include practical tools for supply chain carbon assessment and procurement criteria development.

Information on sustainable procurement frameworks for public sector suppliers can help businesses understand how carbon requirements are applied in tendering processes. This includes guidance on PPN 06/21 compliance and carbon reduction plan development.

The UK legislation website provides access to the Climate Change Act 2008 and subsequent amendments that set the legal framework for net zero targets. Understanding these obligations helps businesses align procurement and reporting practices with national policy requirements.