Utility firm Vattenfall said Tuesday it has teamed up with steel company SSAB and mining firm LKAB to build the 1.4-billion Swedish krona ($158 million) pilot plant.
Existing plants produce large amounts of carbon dioxide, a greenhouse gas, when coal is used to turn iron into hardened steel.
The new factory being built in the northeastern town of Lulea by 2020 will use hydrogen instead of coal and coke. The companies' joint venture, called HYBRIT, aims to have an industrial process in place by 2035.
Vattenfall said the technology could potentially cut Sweden's total carbon dioxide emissions by ten percent, helping meet the country's goals under the Paris climate accord.
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