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Sweden has already experienced the implosion of a publicly financed green bubble with the failure of the battery manufacturer Northvolt, and it is well on its way to experience another. The Northvolt collapse nearly one year ago, in March 2025, left a lot of collateral damage on honest companies that provided services to the on paper promising battery enterprise, but then were left in the dust without their invoices paid when the bubble bursted.
The mistakes of the companies that made business with Northvolt are about to be repeated, this time by the entrepreneurs delivering services to the hyped-up “green steel” manufacturer Stegra. Reports are in about water and heat providers ceasing service to Stegra’s factory in the town of Boden in the Swedish far north, because the company, despite supposedly offering world-class innovative products, is practically insolvent. The debts of Stegra amount to tens of millions of euros (hundreds of millions SEK), and it is to a large extent small, local companies that are going to take the beating for unpaid deliveries.
Stegra itself can postpone its ultimate collapse, due to the still insufficiently sceptical political sector always being willing to infuse new support. But the money that is going to keep the failing “green steel” factory afloat is hardly going to be used to pay their debts to their smallest providers. So far the behavioural pattern of the executives of the green industrial projects in Sweden has shown that the key priority is not building a stable foundation and working out a tenable business plan, but to expand. When money and political goodwill is seemingly infinite, the incentives to grow sustainably are all but eliminated. Instead the bubble grows larger every day, risking to drag even more honest people down with it when it finally pops.
Stegra itself has responded to the media regarding the concerns of creditors by claiming that disagreements about deliveries between the company and its providers are the reason dozens of small and medium enterprises are kept waiting for their due. Understandably, they are playing down the economic peril that their critics have speculated about. However, a company that is as politically embraced and which has enjoyed such considerable public investment should be duty-bound to a higher degree of transparency than that.
Behind the scenes, there are additional reports that Stegra might be on the brink of bankruptcy. The company’s chief finance officer resigned just the week before the story about the unpaid bills broke. As Stegra is in the middle of a new round of equity issuance, this should be particularly alarming for its investors as well as the politicians who have for so long sung the praises of so-called green steel.
The resignation of the CFO is also symbolic from a political point of view. The same person received negative attention from the critics of the publicly funded green transition for a statement he made at a parliamentary seminar, which was recorded and then leaked. In the clip, the CFO affirms to his politician audience that the criticism of the way the green transition has been implemented through public subsidies to companies like Stegra “needs to cease”. The argument, reminiscent less of a practically minded economist in touch with reality, and more in line with ideologically green clergy, was that the scepticism of the finance models for green companies like Stegra or Northvolt risked undermining public support for these projects. The consequences of politicians, but also parts of the public, ignoring the warning signs pointed out by more sceptical economists have been destructive for the prestige and well-being of Swedish entrepreneurship.
The public support for the companies that constitute the green bubble is also worthy of scrutiny. It has been shown in various media reports from the northern town of Boden, where Stegra is located, that local inhabitants are unaware or naive of the mistakes being made at their expense. Despite the town of Skellefteå learning the hard way when Northvolt collapsed that sustainable growth and work opportunities do not come from government hand-outs, many local people of Boden tend to buy into the narrative that their future lies in the green steel factory. It will be a rude, and expensive, awakening for many when Stegra meets the same fate as Northvolt.